Last week, EVDI took over 100% of the Berlin-based digital wealth manager wevest Vermögensverwaltung AG. Awarded by the magazine “Capital” as “Top wealth manager”, wevest is offering its customers, customized ETF investments, individual wealth management as well as access to tokenized assets. With its offering, wevest generated € 380k revenues in FY22 (vs € 515k in FY21) and € -6k EBIT (vs € 125k in FY21) with € 64m assets under management (as of 31.12.2022).

The purchase price is in the low single-digit million range (eNuW: € 1.7m) and is paid in shares (237k worth € 1.4m) and in cash (“lower six-digit Euro amount”; eNuW: € 0.3m). In order to pay in shares, EVDI intended to issue new shares from authorized capital. While the purchase price looks reasonable, the transaction absolutely make sense in our view, mainly because:

• New licenses allow for new products and higher volumes: Wevest is holding licenses for investment brokerage, investment advisory, placement, and financial portfolio management (and is therefore supervised by BaFin) that allow EVDI to offer junior tranches, senior tranches and whole loans of real-estate projects of up to € 8m (as of now, EVDI can only offer junior tranches of up to € 6m), enabling the company to establish a secondary market and to tokenize assets.
• Cross-selling potential in both directions unlocks new revenue potential: EVDI could offer its 14k customers investments into other asset classes on the same platform, while wevest could offer its c. 3-4k customers (eNuW) investments into real-estate projects.

Apart from that, the overall situation in the real-estate market remains depressed due to inflation and rising interest rates which weigh heavy on the whole real-estate industry increasing financing costs and default risks, which in turn reduce the number of attractive projects for EVDI (regarding risk-return).

Beyond 2023, the outlook is brighter, given that EVDI is facing a long-term growing market. Thanks to the scalable platform and a now more diversified business model, we see a stable EBIT margin north of 20% in the mid- to long-term (eNuW: FY´27E), which is in line with management long-term vision (20% EBIT-margin).

HOLD with a reduced PT of € 5.00 based on DCF.