| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 53.68 | 222 |
| Intrinsic value (DCF) | 7.62 | -54 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 6.24 | -63 |
LMS Capital plc (LSE: LMS.L) is a London-based private equity firm specializing in direct and fund-of-funds investments across mid to late-stage ventures, growth capital, buyouts, and recapitalizations. Founded in 2006, the firm targets small to medium-sized businesses in sectors such as media, consumer services, healthcare, industrials, IT, and financials, primarily in the UK, Europe, Israel, and North America. LMS Capital typically invests between £4.5 million and £27 million (converted from USD) in companies with minimum sales of £4.5 million and EBITDA of £0.9 million, often seeking majority stakes. With a focus on value creation through active ownership, the firm leverages its sector expertise to drive growth in portfolio companies. Despite recent financial challenges, including negative revenue and net income in recent filings, LMS maintains a disciplined investment approach, balancing public equities and alternative assets. Its London Stock Exchange listing provides liquidity, while its niche focus on underserved mid-market opportunities differentiates it in the competitive private equity landscape.
LMS Capital presents a high-risk, high-reward proposition for investors comfortable with private equity exposure. The firm’s concentrated portfolio and negative recent earnings (-£5.35M net income in the latest period) raise concerns, but its £11.65M cash position and zero debt provide a buffer. The 0.925p dividend per share (current yield ~2.5% based on market cap) offers income appeal, though sustainability depends on successful exits. With a low beta (0.38), the stock may appeal as a diversifier, but its small market cap (£16.95M) and illiquid nature warrant caution. Success hinges on the firm’s ability to monetize holdings in a challenging exit environment for mid-market PE.
LMS Capital competes in a crowded mid-market private equity segment, differentiating through its hybrid strategy combining direct investments with fund-of-funds exposure. Its focus on UK/European SMEs with enterprise values of £9M–£90M (converted) fills a gap between venture capital and large buyout firms. Unlike mega-funds (e.g., KKR, Blackstone), LMS offers hands-on operational involvement, but this requires deep sector expertise—a potential weakness given its broad mandate across 10+ industries. The firm’s public listing provides rare retail access to private equity returns, though this comes with NAV discounts typical of listed PE (currently trading at ~0.7x estimated NAV). Key challenges include competition from sector-specialized PE firms (e.g., Hg in tech) and the growing dominance of evergreen funds. LMS’s 2021 strategic shift to liquidate legacy assets and focus on new investments remains incomplete, creating uncertainty. Its small team (7 executives) limits deal bandwidth versus larger peers, but enables quicker decisions. Performance depends heavily on the UK mid-market outlook, where economic headwinds may pressure valuations.