CapMan Q3'25: Light at the end of the tunnel in the fundraising market

Translation: Original published in Finnish on 11/06/2025 at 08:20 pm EET

Overall, the Q3 report was good and in line with our expectations. New sales are still cumbersome, but there is finally light at the end of the tunnel for the market. Our forecasts still expect significant earnings growth, and this is subject to success in new sales. If earnings growth materializes, the stock is cheap, but without it, it is fairly valued. We reiterate our EUR 2.1 target price and Accumulate recommendation, and want to see concrete signs of new sales picking up.

Slightly better report than expected

Q3 revenue grew clearly due to the Midstar and CAERUS acquisitions completed earlier in the year. Management fees and wealth management fees developed slightly better than we expected, and overall, the fee mix was better than we expected. Assets under management grew, driven by the CAERUS acquisition, but new sales remained very weak in the quarter. The earnings lines were very well in line with our estimates. Adjusted EBIT was 8.5 MEUR, and it improved significantly from the miserable comparison period. Fee income, critical for the stock's performance, was slightly better than our expectations due to a better revenue mix. Investment income was fully in line with our expectations, and for the full year, investment income has developed well. EPS was slightly below our expectations due to higher-than-expected financing costs and the minority interest in earnings.

Light at the end of the tunnel for the outlook

In its outlook, the company expectedly stated that the fundraising market situation has improved somewhat, but remains challenging. As a result, the company postponed the first closing of Nordic Real Estate IV to 2026. Similarly, the first closing of the new Forest Fund (EFF IV) will still happen in Q4, which was positive news for us. The company also officially announced that it has started preparations for fundraising for the Infra 3 fund. The company will have four large funds fundraising simultaneously next year (the three previously mentioned and CAERUS), and success in next year's fundraising will determine the success of the strategy period. In our view, there are good preconditions for new sales to pick up, as the exit market has finally started to recover properly.

New sales the driver for earnings growth

We have made marginal downward revisions to our estimates, but the big picture remains unchanged. We continue to expect the company's results to improve strongly in 2025 as investment income recovers significantly. In 2026, the result will be further leveraged by the scalability of the management business and the increase in carried-interest income. The 2026 EBIT of ~40 MEUR reflects quite well the current potential of the company. Our dividend forecasts are unchanged, and we expect a steady dividend growth. The earnings mix is forecast to continue to improve as profitability from continuing operations, which is the most valuable area for investors, increases. Between 2024 and 2028, around 60% of revenue growth is expected to translate into earnings on average. It's a challenging level, but doable as long as revenue growth is strong and cost control is in place.

The stock is cheap as long as earnings growth holds up

At the current share price, the value of CapMan's business is approximately 200 MEUR. Relative to assets under management of over 7 BNEUR, the price tag is small. However, the challenge at the moment is that AUM performance is far from its potential. Actual results do not justify a higher value than the current one, but our earnings growth forecasts for next year already put the price tag on the business at a quite inexpensive level (EV/EBIT 8-9x). Relative and absolute multiples send the same message as the sum-of-the-parts. Once the earnings improvement is realized, the stock is cheap and the expected return is excellent. We think the current multiples would also support a stronger view, but first we want to see more concrete evidence of accelerating new sales and improved cost efficiency.