Yesterday, Multitude announced to have acquired the Danish factoring specialist Omniveta Finance through its SME unit CapitalBox. Last week, CapitalBox also launched a new collateral lending product. In detail:

Value-accretive acquisition. Founded in 2012, Omniveta is a factoring specialist, that is purchasing invoices (eNuW: on avg. 30 days credit period) from suppliers with a certain discount (eNuW: 10-20%, including handling fees). With that, Omniveta is improving the overall liquidity of Danish SME´s. We expect that the company is generating a low single digit million Euro amount in sales and being more or less break-even on the bottom line. Multitude is seen to have paid <1x EV/sales (eNuW), which would be a fair multiple, looking at comparable acquisitions in this space. As the company has not provided any details regarding Omniveta or the transaction, our estimates should be seen as an educated guess. With this acquisition, CapitalBox is not only complementing and diversifying its product offering, it is also unlocking meaningful cross-selling potentials arising from the business combination.

New collateral lending product to decrease default risks. Apart from the acquisition of Omniveta, Multitude recently announced to have launched of a new collateral lending product for SME´s. In detail, CapitalBox is offering collateral instalment loans that run from € 100k -1m, which is the kind of cash infusion that is needed for meaningful business expansion. Thanks to the collateral security, CapitalBox is expected to be able to provide greater loan amounts, as the default risks should decline significantly.

In our view, both strategic initiatives of Multitude should expand CapitalBox´s market position in the SME banking segment and are line with Multitude's new strategy of strengthening its market status as an alternative lender for SME´s alongside banks in Europe.

As the stock is still trading at a negative EV and a 3.2x PE´24, the growing, highly profitable, resilient and dividend paying company looks undebatable cheap.

We hence keep Multitude in our NuWays Alpha List and reiterate BUY with an unchanged € 10 PT, based on our residual income model.