Pollen Street PLC (LSE:POLN) has been rated a ‘buy’ by Liberum, which has set a target price of 1,140p after the investment group said it is “well positioned” for further growth.
Liberum said its target price, nearly more than double the current share price (640p), is based on its 2024 estimates, which it believes is more reflective of Pollen Street’s underlying value. The broker believes Pollen Street continues to trade at a discount to peers such as Bridgepoint.
Read more: Pollen Street grows AuM in line with guidance, well positioned for further growth
“Within PE (Private Equity), PE IV continues to invest, with deployment nearing c.70% level at which fundraising for the next flagship fund can begin. PE V thus remains on track for launch in 2023,” it said.
PE IV and PE V refer to funds managed by Pollen Street.
Balance sheet investments, which is the old Honeycomb portfolio which merged with Pollen Street in September, continued to generate strong returns in line with historic performances, Liberum said.
The broker said fundraising remains open for private capital managers, such as Pollen Street, especially given its strong track record and stable investment returns.
“Any pressure from the so-called denominator effect (whereby lower public market asset valuations mechanically increase the allocation to private capital) is temporary in our view,” said Liberum.
“Moreover, as banks reduce lending and de-risk going into the downturn, the opportunities for private credit strategies both to raise money and to deploy at very attractive returns has increased,” Liberum added.