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#TrustBuddy: Using $LC multiples, #GVK alone is worth SEK 1.7

TrustBuddyLogoTwo weeks ago, we started to track the number of loans funded by TrustBuddy’s latest acquisition Geldvoorelkaar (GVK). We are happy to note, that business continues to develop very well for GVK, which is active in the field of SME P2P lending, i.e. loans to small and medium-sized enterprises.

This week, GVK managed to achieve a new milestone by increasing the amount funded to more than EUR 50m, to EUR 50,353,900  at the time of writing. This implies and increase of EUR 850,800 since last week (EUR 121,543 per day on aveage). This is a sharp acceleration of business activity compared to last fall, when TrustBuddy acquired GVK. Back then, the average was EUR 83,871 per day.

gvk We know from the presentation material provided in connection with the acquisition, that GVK has a revenue margin on funded loans “approaching 6%“. In its base case forecast, TrustBuddy guided for 2015 lent out capital of EUR 46.7m and net sales of EUR 2.8m. This included the Netherlands business only and does not take into consideration of the planned expansion to Belgium and the Nordics.

In 2013, GVK lent out EUR 17.3m and the guidance for GVK’s  result for 2014 which was provided in mid-November was for lent out capital of EUR 22m.  As mentioned above, today we are at EUR 50.4m and the average number of loans provided is at EUR 121,543 per day. Today is February 6th, that means we have 327 days left in 2015. Assuming an average of EUR 120,000 per day for the remainder of 2015, this would imply additional funds lent of EUR 39.2m and would bring the total amount of funds lent to EUR 89.6m by the end of 2015. This in turn, would imply net loans funded for 2015 to reach EUR 50.3m. Applying a 6% revenue margin on funded loans (as guided by the company), this would imply 2015 revenues of EUR 3m for GVK, just from the Netherlands. Not to forget that GVK’s business is highly profitable with EBIT margins of around 35%.

Now we do not want  to argue that the 2015 EV/Sales multiple of 25x that US P2P lending provider Lending Club is currently trading at is reasonable. However, just for the fun of it we can note that if we applied the same multiple to GVK’s expected 2015 result we would get an EV of EUR 75m or SEK 705m at current exchange rates, for GVK only that is. The current EV of TrustBuddy is around SEK 375m. By the way, GVK is growing faster and has a higher profitability than Lending Club.

We think that the P2P SME business was a brilliant investment for TrustBuddy and we look forward to the rollout in the Nordics and across Europe.

Nordic Investor


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