FTSE 250 winners: Molten Ventures, Keller, WPP

A “decacorn” milestone for Molten Ventures Ord (LSE:GROW) today put its valuation discount in focus as the technology investor led the FTSE 250 index ahead of WPP (LSE:WPP) and high-flying Keller Group (LSE:KLR).

The landmark for Molten followed the disclosure that satellite-based portfolio company ICEYE, which it first backed in 2018, had been valued at 10 billion euros (£8.6 billion) in a financing round.

• Learn with ii: Inheriting an ISA | Can I Transfer an ISA to Someone Else? | Open a Stocks & Shares ISA

Molten’s holding in ICEYE will increase to £317 million, an uplift of £238 million or 236% from the 31 March valuation despite it also realising £22 million of sale proceeds.

The transaction, which has created Molten’s second decacorn start-up after Revolut previously reached the 10 billion euros valuation mark, has propelled its net asset value per share to 877p from the 760p referred to in today’s annual results.

Molten shares jumped 78.5p to 616.5p, which compares with the new price target of broker Berenberg at 790p. Barclays added that shares remain attractive at a near 39% discount.

Helsinki-based ICEYE delivers sovereign monitoring capabilities from space, with its satellites able to detect and respond to changes in any location on Earth.

Seven governments across Europe have so far procured systems amid significant momentum after ICEYE reached 250 million euros of revenues and 100 million euros of underlying earnings.

And with a contracted order book worth over 1.5 billion euros, output is set to climb from 50 satellites a year to 100 by 2028.

• Stockwatch: this turnaround share could march higher
• Iran war 100 days: how stocks and markets have performed
• Why Tesco and Sainsbury’s shares now offer ‘good entry point’

Molten chief executive Ben Wilkinson said the success of ICEYE highlighted his company’s long-held belief in backing European technology champions at their earliest stages.

He added: “Over the past year, there has been a distinct shift with the recognition of the need for technological sovereignty; Molten’s portfolio of European high-tech companies is well placed to provide the resilience that is required across technology platforms.”

Molten invests across the four sectors of enterprise and software-as-a-service, AI, deeptech and hardware, consumer technology and digital health. Since its IPO in June 2016, Molten has deployed over £1 billion of capital and realised more than £750 million up to 31 March.

Gross portfolio value increased 13% to £1.5 billion in the year to 31 March, while Molten’s core 17 companies achieved 41% revenue growth and average gross margin of 70%. The newest entrants to this line-up are Modo Energy and drone delivery investment Manna Drones.

Developments since the year-end have included a new cornerstone investor for Molten’s new Growth Fund and the realisation of £63 million from Revolut while retaining significant upside.

Wilkinson said: “This reflects our active approach: retain upside, release capital, and recycle it into the next generation of growth opportunities, which is the engine of our capital allocation policy.”

Molten shares have doubled since July, which puts it on a par with the record of geotechnical specialist contractor Keller after a run from 1,282p in September to today’s 2,532p.

The latest rise of 68p came as the company said it had secured further work on the reconstruction of the Interstate 40 highway in southern US.

Keller has now secured $380 million (£283 million) of work in relation to the I-40, of which $70 million has been completed and the rest due over the next two to three years.

The contract supports longer-term revenue visibility and increases Keller’s order book to a record level of approximately £1.9 billion. Since 2022, Keller has doubled its operating profit after growing revenues to more than £3 billion and delivering a sharp improvement in underlying operating margin to 7.1%.

• Has tech sector sell-off called top of the market?
• Sign up to our free newsletter for investment ideas, latest news and award-winning analysis
• AI boom or bubble? How to navigate risks and opportunities

Meanwhile, WPP shares showed signs of recovery today after City firm Berenberg said the marketing and advertising group had the pieces in place to rebuild its valuation.

The bank initiated coverage with a price target of 405p, which compared with 263p prior to today’s improvement of 17.5p. The shares have slumped by almost 50% in a year after a series of downgrades left annual headline operating profit 22.6% lower at £1.3 billion.

Chief executive Cindy Rose told investors in February that WPP’s underperformance has been driven by excessive organisational complexity, a lack of an integrated operating model and inconsistent strategic execution.

She has pledged to streamline WPP into four operating units across four regions, all unified by the company’s “pioneering agentic marketing platform” WPP Open.

Berenberg said: “While WPP’s recent underperformance has raised questions about its ability to adapt to a fast-changing environment, particularly in data and technology, we believe the group already possesses many of the right assets.

“The key challenge now is execution of its “Elevate28” plan, targeting a more integrated, agile and client-centric model.”