Stock Analysis & Valuation Spice Private Equity AG (SPCE.SW)

• Previous Close: CHF16.00
• Sector Valuation Confidence Level: High

Valuation method	Value, CHF	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	50.60	216
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Spice Private Equity AG (SPCE.SW) is a Switzerland-based private equity and venture capital firm specializing in direct investments and fund-of-funds strategies. The firm, operating through its subsidiary Spice Private Equity (Bermuda) Ltd., focuses on emerging markets, with significant exposure to Asia Pacific (50-60%), Sub-Saharan Africa (20-30%), and Latin America (20-30%). It targets middle-market and later-stage investments, including buyouts, growth capital, and recapitalizations, with typical deal sizes ranging from $10 million to $60 million. Spice Private Equity invests across diverse sectors such as consumer goods, telecommunications, education, financial services, infrastructure, and healthcare. The firm often co-invests with GP Investments, Ltd. and other private equity players, seeking influence over portfolio companies. With offices in Zug, Bermuda, London, Singapore, and the U.S., Spice Private Equity leverages its global footprint to identify high-growth opportunities in underserved markets. The firm's strategy combines direct investments with selective fund allocations, offering investors diversified exposure to private equity in developing economies.

Investment Summary

Spice Private Equity AG presents a niche opportunity for investors seeking emerging markets private equity exposure with a Swiss governance framework. The firm's FY2021 performance was strong, reporting $35.7M net income and $6.70 diluted EPS, supported by $88.1M in cash reserves and no debt. A $0.95 dividend per share indicates capital return potential. However, the concentrated focus on volatile emerging markets (representing 100% of investments) introduces geopolitical and currency risks. The small market cap ($80.4M) and low beta (0.45) suggest limited liquidity but lower systemic risk correlation. Investors should weigh the firm's specialized market access against the inherent risks of frontier market investing and the illiquid nature of private equity holdings.

Competitive Analysis

Spice Private Equity occupies a unique position as a small-cap, emerging markets-focused private equity firm with Swiss governance standards. Its competitive edge lies in: (1) Concentrated emerging markets expertise, particularly in Asia and Africa where large Western PE firms often have limited presence; (2) Flexible investment approach combining direct deals with fund investments; (3) Strategic partnership with GP Investments providing deal flow and co-investment opportunities. However, the firm faces challenges competing with larger global private equity players in fundraising and deal sourcing. Its small size limits ability to participate in larger transactions common in the industry. The geographic focus, while specialized, exposes the firm to higher political and currency risks than developed market peers. Unlike many private equity firms that focus solely on direct investments or fund-of-funds, Spice's hybrid model provides diversification but may lack the depth of specialists in either approach. The firm's value proposition centers on offering institutional-quality emerging markets PE access through a publicly traded Swiss vehicle - a relatively rare combination in the asset management space.

Major Competitors

• Apollo Global Management (APO): Apollo is a global PE giant ($61B AUM) with broader geographic and sector focus compared to Spice's emerging markets specialization. Apollo's scale allows for larger deals and diversified strategies but lacks Spice's concentrated emerging markets expertise. Apollo's credit business provides stability that Spice doesn't have.
• KKR & Co. (KKR): KKR operates at massive scale ($471B AUM) across all private markets globally. While KKR has emerging markets teams, its focus is more balanced toward developed markets. KKR's brand and fundraising capabilities dwarf Spice's, but Spice offers more dedicated access to smaller emerging markets deals.
• Franklin Resources (BEN): Franklin offers emerging markets exposure through public securities rather than private equity. While more liquid, it lacks Spice's private market access and control-oriented approach. Franklin's much larger scale ($1.5T AUM) provides resources Spice can't match.
• Man Group (EMG.L): Man Group is a large alternative investment manager ($148B AUM) with some emerging markets hedge fund strategies. Unlike Spice's private equity focus, Man specializes in liquid alternatives. Man has greater institutional reach but less specialized emerging markets private equity capabilities.
• GP Investments (GPI.L): As Spice's parent company, GP Investments shares similar emerging markets focus but operates at larger scale. GP Investments competes directly for deals but also provides Spice with co-investment opportunities. GP's standalone funds may attract capital that might otherwise go to Spice.