Why we’ve increased our investment in this industry leader

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Cerved was founded in 1974 as a data processing centre, and has evolved and grown over the years by innovating its products and developing new businesses. The company has been in operation over forty years and has created a large database of proprietary information of commercial, accounting, economic, financial and legal data. This data is gathered from approximately 15 million companies and 20 million people. Due to several acquisitions over time, the company has strategically leveraged its vast database and focused on the credit information business segment.

This strategic decision has resulted in Cerved becoming the market leader in Italy in providing credit and financial profiles to its customers.  Cerved provides the most complete suite of information for corporations, financial institutions, insurance firms, and individuals. Every year, over 30 thousand customers rely on Cerved’s services to assess credit worthiness and to monitor and manage credit risk.  The financial information and rating profile provided by Cerved is essential for organizations to assess financial worthiness, evaluate loans, and assess policies. Over the years, Cerved has continued to grow and evolve through a series of partnerships and synergies.  It has been able to successfully leverage its core business of credit information to roll out successful verticals such as Marketing Solutions and Credit Management to the existing and new customers, thus creating new lines of revenue.

We have followed Cerved since its initial public offering (IPO).  We recently increased the size of our investment for the following reasons:

  1. Valuation: The Company is valued at less than 13x cash earnings, that valuation is obscured by purchase price amortization.
  2. Competitive advantage: The Italian credit information market has an oligopolistic structure and high entry barriers. Cerved’s key asset is that it is the largest and most comprehensive database of corporate credit information in Italy with very few competitors. As a result, Cerved can provide a higher level of data accuracy, analytics, and depth of information than any of its competitors
  3. Growth: The Company has generated mid-single digit revenue growth and is continuing this trend.

This report has been prepared by Pengana Capital Ltd (ABN 30 103 800 568, Australian financial services license number 226566) (“Pengana”).  This report does not contain any investment recommendation or investment advice and has been prepared without taking account of any person’s objectives, financial situation or needs.  Therefore, before acting on the information in this report a person should consider the appropriateness of the information, having regard to their objectives, financial situation and needs.
Pengana is the issuer of units in the Pengana Global Small Companies Fund (ARSN 604 292 677)  (“the Fund”).  A Product Disclosure Statement for the Fund (“PDS”) is available and can be obtained by contacting Pengana on (02) 8524 9900.  A person who is considering investing in the Fund should obtain the relevant PDS and should consider the PDS carefully and consult with their financial adviser to determine whether the Fund is appropriate for them before deciding whether to invest in, or to continue to hold, units in the Fund.
The value of investments can go up and down. Past performance is not a reliable indicator of past performance.
While care has been taken in the preparation of this report, Pengana makes no representation or warranty as to the accuracy, currency or completeness of any statement, data or value.  To the maximum extent permitted by law, Pengana expressly disclaims any liability which may arise out of the provision to, or use by, any person of this report.

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Pengana Capital Group