I somewhat agree, although in my opinion they are a bit beyond just ramping up:
The Company has invested more than $24 million of capital across 24 investments in 19 portfolio companies. Management's target in building a balanced portfolio is based on the pricing of risk in the SME market a rate of $250,000 of annual revenue per million of invested capital1. The portfolio has reached a scale at which, as designed, it is generating stable income and Adjusted EBITDA1, which has enabled the Company to declare its first dividend.
24 deals with 19 companies, and they're hitting their 25% royalty - that seems impressive to me.
My question is: can they keep it up? It would seem up until now they've demonstrated the ability to identify and successfully (so far) execute deals, can they continue to find deals of similar quality?
Grenville continues to possess a strong pipeline of investment prospects. During 2014, management reviewed approximately 465 prospective transactions, proceeded to the due diligence stage on approximately 260 transactions, issued 68 term sheets and closed 16 new investments and 4 follow-on investments. With the volatility of the broader markets experienced during the fourth quarter, management deliberately slowed its rate of investment, as evidenced by the decrease in the rolling three month average investment per month. Management believes this volatility in the markets has the potential to provide the Company with enhanced deal flow, as small and medium sized enterprises often face difficulty in accessing growth capital in challenging equity markets.
Seems like they have a healthy pipeline, one would hope these would be similar quality deals.
To me, a company grossing 25% returns on investment who are just crossing into profitability (Income (loss) after taxes was $(80,461) in Q4 2014 and $(3,457,760) in FY 2014, including non-recurring costs of $3,636,197 directly attributable to the Company's going public transaction, Adjusted EBITDA1 (loss) of $(61,451) in Q4 2014 and $490,357 in FY 2014. Excluding the writedown of $1,000,000, Adjusted EBITDA was $938,549 in Q4 2014 and $1,490,537 in FY 2014) who is currently paying a 7% dividend, and seems to have ample opportunity to grow their portfolio, seems attractive. I wonder if I'm missing something. The biggest risk I see would be a recession, or if they are overly focused in one sector that craters (ie: oil in 2014), that could be disastrous.
