On 2 November and 2 December 2021, Electra Private Equity (ELTA) reiterated its corporate strategy for moving its listing from the Main Market of the London Stock Exchange to AIM, and provided updates on current trading for its remaining corporate investment, Hotter Shoes. With respect to trading, there was ongoing strength in Hotter’s revenue growth. Management’s medium-term guidance for Hotter suggests a revenue CAGR of 12% and EBIT CAGR of c 86% in FY22–25e. This guidance excludes incremental revenue from potential new brand partnerships as Unbound seeks to leverage its core target demographic, which management believes could double profits again in the medium term. Applying the median EV/sales multiple of UK online consumer peers to Hotter’s FY22 and FY23 guidance suggests an equity value of £22–33m, an average of £27.5m, versus its last reported (30 September 2021) adjusted net asset value (NAV) of £33.5m, before any incremental revenue and profit from the new brand partnerships. Unbound’s equity value will likely be enhanced when it is listed on AIM by the transfer of residual cash from Electra. Our estimated NAV for ELTA is £36.1m compared to the current market cap of £24.8m.
