Duke Capital plc (LON:DUKE) has reported solid interim results for FY25, reflecting its adaptability and strong performance amid challenging market conditions. With a focus on delivering shareholder value and maintaining a robust portfolio, the company continues to make strides in the hybrid capital investment space.
Steady Growth and Strong Portfolio
Duke Capital’s recurring cash revenues rose by 4% to £12.7 million, a testament to its growing base of hybrid credit investments. Though total cash revenues saw a slight decline due to fewer exit premiums, the resilience of its portfolio shines through. Over £15 million was deployed across existing investments, including notable allocations to Step Investments and United Glass Group (UGG), enabling their strategic growth and acquisitions.
Andrew Renton, Director of Research at Cavendish, remarked:
“Duke Capital has shown resilience and innovation in its approach, successfully navigating macroeconomic headwinds while continuing to deliver value to its shareholders. The focus on transitioning to a balance sheet-light model marks a pivotal step in the company’s strategy.”
A Transformative Path Forward
Duke’s £23.5 million equity raise post-period end underscores its commitment to accelerating growth and creating a self-funding capital model. This move aligns with the company’s goal to mitigate equity dilution and optimise cash flow. The transition positions Duke well to support existing partners while leveraging buy-and-build opportunities for future growth.
Looking ahead, the company’s North American and Irish businesses are poised for robust performance, with lower forecasted Bank of England base rates providing a favourable backdrop. The dividend yield, currently at a compelling 10%, remains a key attraction for shareholders.
Enhancing Shareholder Value
Duke Capital’s innovative hybrid investment strategy, which combines yield with capital growth, continues to deliver substantial returns. Successful exits, such as the recent sale of Fabrikat, highlight the potential of this approach. This transaction yielded a remarkable IRR of 32.4%, demonstrating Duke’s ability to generate superior returns while supporting its partners’ long-term goals.
Andrew Renton further added:
“The adaptability of Duke’s investment model has positioned it uniquely in the market. With a proven track record and a strategic shift towards utilising third-party capital, 2025 could indeed be transformational for the company.”
Final Thoughts
Duke Capital remains steadfast in its mission to bridge the funding gap for lower mid-market businesses, ensuring sustainable growth for its partners and value creation for its shareholders. As the company continues to innovate and adapt, the outlook for Duke Capital is undeniably positive, with promising opportunities on the horizon.
