Stock Analysis & Valuation Castle Private Equity AG (CPEN.SW)

• Previous Close: CHF3.34
• Sector Valuation Confidence Level: High

Valuation method	Value, CHF	Upside, %
Artificial intelligence (AI)	19.60	487
Intrinsic value (DCF)	1.02	-69
Graham-Dodd Method		n/a
Graham Formula	26.10	681

Strategic Investment Analysis

Company Overview

Castle Private Equity AG (CPEN.SW) is a Swiss-based evergreen fund specializing in private equity investments, including fund-of-funds and direct investments. The fund targets a diversified portfolio across large buyouts, mid-market buyouts, growth capital, distressed debt, mezzanine financing, and venture capital. With a global investment focus, Castle Private Equity primarily operates in developed markets in Europe and North America, investing in sectors such as manufacturing, biotechnology, retail, media, telecommunications, and IT. The fund adopts a long-term investment horizon, typically holding positions for around ten years, and often seeks majority stakes with board representation. Listed on the Swiss Exchange (SIX), Castle Private Equity AG provides investors with exposure to a broad spectrum of private equity opportunities, leveraging secondary market transactions alongside primary fund subscriptions.

Investment Summary

Castle Private Equity AG offers investors access to a diversified private equity portfolio, but recent financials indicate challenges, with negative revenue and net income in the latest reporting period. The fund's low beta (0.278) suggests lower volatility relative to the broader market, which may appeal to risk-averse investors. However, the negative EPS (-0.27) and declining profitability raise concerns about near-term performance. The fund maintains a strong cash position (CHF 16.6M) with no debt, providing financial flexibility. A notable positive is the dividend payout (CHF 1.32 per share), which could attract income-focused investors. Given its niche focus on private equity secondary markets and fund-of-funds strategy, Castle Private Equity may suit investors seeking diversified private market exposure, but its recent underperformance warrants caution.

Competitive Analysis

Castle Private Equity AG operates in a competitive private equity fund-of-funds landscape, where differentiation hinges on access to high-quality funds, secondary market expertise, and geographic diversification. The fund’s evergreen structure provides liquidity advantages over traditional closed-end private equity funds, appealing to investors seeking flexibility. However, its small market cap (CHF 32.1M) limits its ability to compete with larger asset managers in terms of scale and bargaining power. The fund’s focus on Europe and North America aligns with mature private equity markets but may limit growth opportunities in emerging regions. Its strategy of combining primary fund investments with secondary market purchases offers diversification but may face competition from specialized secondary buyers. While Castle Private Equity’s long-term investment horizon and board-level involvement in portfolio companies provide governance advantages, its recent financial underperformance could hinder its ability to attract new capital compared to more profitable peers.

Major Competitors

• Partners Group Holding AG (PEQ.SW): Partners Group is a global leader in private markets investing, with a significantly larger AUM and broader geographic reach than Castle Private Equity. Its strengths include deep direct investment capabilities and a strong secondary market presence. However, its larger scale may reduce flexibility in niche investments where Castle Private Equity could compete.
• Apollo Global Management, Inc. (APO): Apollo is a giant in alternative asset management, with extensive expertise in private equity, credit, and real assets. Its scale and diversified platform overshadow Castle Private Equity, but Apollo’s focus on larger transactions may leave room for Castle in mid-market and secondary deals.
• KKR & Co. Inc. (KKR): KKR is a top-tier global private equity firm with a strong brand and extensive resources. While KKR dominates large buyouts and growth investments, Castle Private Equity’s focus on fund-of-funds and secondary markets provides a differentiated, albeit smaller-scale, investment approach.
• Blackstone Inc. (BLK): Blackstone is the world’s largest alternative asset manager, with unparalleled scale and a diversified private equity portfolio. Castle Private Equity cannot match Blackstone’s resources, but its evergreen structure and secondary market focus offer a niche alternative for investors.