Taaleri Q1 on Tuesday: Eyes on the ramp-up of private equity funds

Translation: Original comment published in Finnish on 05/02/2024 at 7:05 am EEST

Taaleri will publish its Q1 result on Tuesday at approximately 08:00 EEST. We believe no significant one-off income occurred during the review period, so our earnings estimate is rather modest. Our attention in the report is, as usual, on the sales outlook for the new SolarWind 3 fund and Garantia's development. Otherwise, the report is unlikely to offer any bigger surprises.

No one-off income just like in the comparison period

Taaleri’s revenue is a rather poor indicator of the development of the Group’s business operations, as most of the investment income that fluctuates by quarter is also reflected in revenue. We recommend focusing on the development of the individual segments. At Group level, we expect revenue to be 11.1 MEUR. This is close to last year’s level, as just like in the comparison period we do not expect any significant one-off income. Our EBIT estimate is 3.3 MEUR. In our forecasts, EBIT is supported by the decreasing loss from private equity funds and increasing investment income.

Eyes on the ramp-up of private equity funds

In private equity funds, the profitability based on recurring fees from Renewable energy should already be clearly positive as the newest SolarWind 3 fund has grown to a significant size class. Other private equity funds are still clearly loss-making, however, as the Bioindustry's frontloaded growth investments in, e.g., personnel resources burden profitability. In total, we expect Private Equity Funds' operating result to be -0.3 MEUR, as we do not expect the segment's profitability to be supported by significant one-off income this quarter.

In terms of new sales, the focus is naturally on the SolarWind 3 fund, which is in the fundraising stage. We are very interested in any comments on sales development, even though actual sales figures concerning the fund are hardly available. On the Bioindustry side, the first fund is approaching its final close, so we would welcome any information on the advancement of the next bio fund. Further information on the new real estate fund is unlikely this time around either, as it is practically impossible to launch new real estate products in the current market. On this front, however, news are likely to come sooner than later, because surprisingly, growing real estate funds was highlighted as an integral part of Taaleri’s updated growth strategy at the CMD last fall.

Garantia suffers from a slow loan market

For Garantia, we expect insurance revenue to remain at the level of the previous quarter, as sales development impacts revenue with a delay due to premium periodization practices. However, the depressed housing market weakens Garantia’s sales volumes in mortgage guarantees, and the segment’s growth outlook has weakened over the past 18 months. We consider this to be a temporary challenge, however, that will pass as the housing market picks up.

The outlook for the investment portfolio focusing on fixed income investments has, on the other hand, clearly brightened as interest rates have risen. We expect investments to have yielded approximately 2% at fair value in Q1. We expect claims costs to remain slightly elevated as in the previous quarter. Our EBIT estimate for Garantia is 3.8 MEUR.