Record Asset Base And Expanding Real Assets Platform Will Drive Long Term Earnings Power

Catalysts

About CapMan Oyj

CapMan Oyj is a Nordic private assets manager focused on real assets, private equity and wealth products for institutional and private investors.

What are the underlying business or industry changes driving this perspective?

• Record assets under management of EUR 7.1 billion with a clear roadmap toward EUR 10 billion as transaction activity and fundraising times normalize, supporting sustained double digit fee income growth and higher total revenue.
• Expanding real assets platform, including Real Asset Debt and larger open ended real estate funds in resilient segments such as residential, social real estate and hotels, positions CapMan to capture renewed institutional demand for income focused strategies and enhance recurring management fee margins.
• Growing international investor base, with more than half of new capital from outside the Nordics and 80% of inflows from new clients, broadens distribution channels and should drive structurally higher fundraising volumes, boosting fee profit scalability and operating leverage.
• Embedded fair value gains in the balance sheet from own funds and the expected reopening of the exit market over the next 6 to 12 months create a pipeline for carried interest realization and positive investment cash flow, lifting earnings and return on equity above current levels.
• Strengthening sustainability credentials in real estate and infrastructure, evidenced by rising benchmark ratings, are likely to attract larger allocations from investors integrating ESG in their mandates, supporting premium pricing on products and improving long term net margins.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming CapMan Oyj's revenue will grow by 14.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 23.0% today to 33.3% in 3 years time.
• Analysts expect earnings to reach €28.4 million (and earnings per share of €0.16) by about December 2028, up from €13.0 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 16.3x on those 2028 earnings, down from 25.7x today. This future PE is greater than the current PE for the GB Capital Markets industry at 16.2x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.6%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The exit market for private assets may fail to normalize or could weaken again in response to renewed macroeconomic or geopolitical shocks, delaying realization of the embedded fair value gains on the EUR 185 million balance sheet portfolio and keeping carried interest and earnings materially below expectations.
• Secular headwinds in parts of the real estate market, including tighter financing conditions and changing demand patterns, could reduce investor appetite for both open ended and value add real estate funds, slowing fundraising, fee income growth and ultimately revenue.
• If competition for institutional capital intensifies while fundraising cycles remain longer than historically, CapMan may be forced to offer more investor friendly fee structures or accept smaller fund sizes. This would pressure fee profitability, operating leverage and net margins.
• Reliance on fair value uplifts and balance sheet deployment to support growth, including equity bridges and own fund commitments, exposes the company to valuation reversals or weaker portfolio performance. This would directly hit investment returns and could constrain future earnings if cash flow remains negative for longer than anticipated.
• Execution risks in integrating acquisitions such as CAERUS and scaling newer strategies like Real Asset Debt and Natural Capital across multiple countries could lead to higher than expected costs, greater operational complexity and inconsistent performance. This would undermine the targeted double digit revenue growth and margin expansion.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of €2.1 for CapMan Oyj based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be €85.2 million, earnings will come to €28.4 million, and it would be trading on a PE ratio of 16.3x, assuming you use a discount rate of 7.6%.
  
• Given the current share price of €1.88, the analyst price target of €2.1 is 10.3% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.