Change is gathering pace at Lloyd Fonds. In line with its goal to become a leading asset manager in Germany over the medium term, it plans to launch its new business model, focused on open-end retail funds, in Q219. Growth may also be by acquisition (finances are robust) with assets under management targeted to exceed €5bn within five years (€1bn+ in 2019). Management is being further strengthened and strategic divestments are under review. Given likely c €2.5m one-off restructuring costs, current year guidance is newly lowered to a net loss of €1.5m. Continued weakness in H118 results only confirms the need to reposition.
Lloyd Fonds’s proposed reorientation towards open-end investment products is to be based on three new product lines: a range of actively managed retail funds, digital portfolio management and individual asset management, which can draw on existing expertise in alternative real assets, particularly real estate. Market launch is expected in Q219 following the formation of a dedicated capital management company and a reworking of the Lloyd Fonds brand. The repositioning is being supported by key management changes, including a chief investment officer from April 2019, two new anchor shareholders, notably DEWB, a long-established listed private equity company, and first expansion from its Hamburg base with a branch opening in Munich. Development is being funded by June’s €3.8m capital increase.
In view of such operational change, analysis of current financial performance offers limited guidance. The half to June saw a 22% reduction in sales, reflecting asset disposals in H117, contract expiries and insolvencies. However, divisional PBT was maintained as impairment reversals and fair value remeasurement gains made up for the €1.5m tax refund which flattered the comparative. A near doubling of central costs moved overall PBT sharply into loss (€0.5m vs €0.9m profit). Owing to repositioning measures, 2018 net profit guidance is cut from just below last year’s €1.4m profit to a €1.5m loss. Finances are sound with €13m net cash at June.
Current investor appreciation of Lloyd Fonds’s reorientation (share price has more than doubled since the arrival of the new shareholders in March) shows a long-term view, given no quick earnings fix and possibly no dividend payout.