Topic: Last week, LAIQON released an ad-hoc announcing a capital increase from a new anchor investor, which should provide sufficient financing for the upcoming growth plans. In detail:

The Hamburg based Joachim Herz Foundation (€ 1.5bn AuM, named after son of Tchibo founder and former majority shareholder of Beiersdorf Max Herz) will subscribe to a 9.93% cash capital increase without subscription rights and thus becomes an anchor investor in LAIQON post capital increase. While the foundation follows an entrepreneurial spirit by investing its capital into assets such as stocks, the returns are used for charitable purposes. Given the long-term investment horizon of such foundations, we regard this move as a strategic step to support LAIQON in scaling its business, rather than a short-term investment opportunity.

The price is set at € 6.00 per share, implying an 18% premium on Thursday's closing price. In sum, gross proceeds are seen at € 12.6m, which (1) are to be used for the further expansion of LAIQON's digital assets platform (DAP) and its Wealth-Tech LAIC, ultimately laying the technical footing for further cooperations such as the one with Union Investment, but more importantly (2) to source new and expanding existing sales cooperations to drive AuM growth.

In our view, this capital increase comes at a beneficial time: The recent sales start of the Union Investment cooperation product "Wertanlage" has just started last month. Albeit most technical ramp-up costs should have been incurred already, the marketing ramp-up is now also funded sufficiently. Furthermore, the still sub-scale top line faces a cost base that is well prepared for the expected AuM expansion, but therefore also leads to still negative EBITDA and FCF for FY'24e & '25e. With the new liquidity cushion, management can now fully focus on execution and expansion of its scalable business.

In sum, the strained liquidity situation has burdened the stock throughout FY'24, in our view. With that resolved,  investor confidence and thus the undervaluation should be lifted going forward. With next results (FY'24e, due next spring), we expect first tangible results of the Union Investment cooperation, showing the growth trajectory ahead. Agains this backdrop, we reiterate our BUY recommendation, but lower our DCF-based PT to € 6.80 (old. € 7.10), due to lower net debt and higher no. of shares.