Draper Espirit remains positive on growth in main markets

Dublin-listed venture capital firm Draper Esprit is anticipating a period of trading slowdown due to the coronavirus pandemic, but remains "very positive" about the long term areas of growth in its main markets, the company has said.

Draper Esprit on Monday provided investors with details on the measures taken to date to protect employees, support portfolio companies and undertake detailed reviews of the potential cash requirements of investments across quarterly timeframes.

“We have increased our dialogue with our portfolio companies and continue to provide them with operational support and advice, particularly in relation to accessing various elements of the government’s financial assistance packages,” it said.

“We are actively modelling the potential impact of Covid-19 on our portfolio and although we anticipate a period of trading slowdown we remain very positive about the long term areas of growth in the markets our companies address.”

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These markets include artificial intelligence, cloud computing for remote working and digital health.

“Many of our portfolio companies generate recurring revenues and the geographic diversity of our portfolio, combined with the broad cross section of areas in which they operate, means that we are not overly exposed to any individual market or sector,” it said.

An initial review of the financial robustness of its portfolio found that businesses amounting to 80 per cent of its net asset value have strong cash balance sheets and/or the ability to adjust costs to trade through a crisis lasting through 2020.

Only a small number of its portfolio companies (about 7 per cent) operate in industries which are more directly affected, such as travel, leisure and hospitality. “We will work closely with these companies to navigate this period of uncertainty,” it said.

“A number of our portfolio companies are playing an increasingly important role in the provision of online healthcare services, communications systems and entertainment.”

The group reported a gross portfolio value of £683 million as at September 30th and has a debt facility of £50 million, of which £45 million is currently drawn with £36 million undeployed.

Draper Esprit chief executive Martin Davis said the company was not “over exposed” to any particular market.

“The ongoing spread of the Covid-19 virus is, first and foremost, a public health crisis but the impact on the economy and businesses will clearly also be very significant,” he said.

“Many of our portfolio companies generate recurring revenues and the geographic diversity of our portfolio, combined with the broad cross section of areas in which they operate, means that we are not overly exposed to any individual market or sector.”