Investors have yet to react to the pre-close trading update from NetScientific (NSCI:69p), an Aim-traded investment company that invests in early-stage life sciences and technology companies and earns fees from syndicating investments through its corporate finance boutique, EMV Capital.
Netscientific runs a portfolio of 24 companies of which 18 raised £70mn through equity and venture debt last year, buoyed by key fundraisings after several companies achieved significant milestones. It operates an asset-light business model, making direct investments of £0.6mn last year together with £5.3mn of third-party ‘advised’ investments, thus benefiting from carried interests across 11 portfolio companies.
I suggested buying the shares, at 64p, in my 2023 Bargain Share Portfolio, highlighting why the underlying valuation of the portfolio is materially above carrying values in the accounts. The investment case remains firmly intact, so much so that the directors are optimistic about liquidity events to “enhance shareholder value” and expect to report a “significant increase in the [portfolio] fair valuation” in next month’s annual results.