Press release

Business update 30 September 2022

27 October 2022


Quest for Growth closed the third quarter of the financial year with a € 23,141,019 loss. The return on equity, taking into account the gross €1.02 dividend distributed on 21 April 2022 and the capital increase following the optional dividend, was -13.7%. This shows that Quest for Growth did not escape the global stock market malaise. However, the decline was limited by several successful exits in our portfolio. In the venture and growth capital segment, Quest for Growth sold its stake in the German biotech company c-Lecta to the Irish company Kerry. In the portfolio of listed stocks, we accepted KKR’s bid for Dutch bicycle manufacturer Accell.

Over the first three quarters of the year, Quest for Growth shares saw their share price decline by 29.3% to a closing price of €5.64 on 30 September 2022. The decrease is the result of the general malaise in the markets and of the dividend payment mentioned above. The discount of stock price to net inventory value further increased to 29.7%, up from 25.5% at the end of 2021.

Market environment

Following an excellent year on the stock exchange in 2021, 2022 is proving extremely difficult. Global stock market indices also fell during the third quarter. The European stock market index STOXX Europe 600 Net Return fell by 19% in the past nine months. It is not unusual for the share prices of smaller companies to fall more sharply than their larger counterparts during a stock market correction. That also applies this time. The small cap index (STOXX Europe Small 200 Net Return) experienced a more substantial decline of 34%. The US stock exchanges are also following this downward trend. Expressed in euros, the S&P 500 fell by nearly 13%. Excluding the impact of the more expensive dollar, the S&P 500 fell as much as 25%. The main cause of turbulence in global stock markets has been stubbornly high inflation, rapidly rising interest rates and growing fears of recession. On top of that came rising geopolitical tensions relating to the war in Ukraine.

Investments in quoted equities

The listed stocks performed about -25% and held up against the STOXX Europe Small 200 NR index. Jensen-Group, the Belgian specialist in industrial washing systems, is the best performing stock in the listed portfolio. The stock rose by nearly 6%, mainly following the release of better-than-expected annual results. Wolters Kluwer (-2%) and ABO Wind (-3%) are having a relatively good stock market year despite a slight drop in share price. The Netherlands’ Wolters Kluwer was able to excel at its half-year results with 7% organic growth of its sales. Overall, 73% of sales are recurring in nature and come from software, consulting and subscriptions to digital information. At the publication of its half-year results, ABO Wind was able to announce that the company is developing projects with a total renewable energy capacity of more than 20 GW.

The three strongest decliners in the portfolio are Steico (-61%), PSI Software (-57%) and Gurit (-53%). Despite strong earnings in the first two quarters, Steico cannot escape the recession fears hanging over the entire European construction sector. PSI Software, on the other hand, surprised with its negative outlook on software for power grid operators. The share price of Gurit, the Swiss composite materials specialist, fell further due to challenges in the supply chains within the wind turbine sector.

During the first three quarters of 2022, Quest for Growth bought one new position in EVS, and parted with three stocks: Fresenius, Technotrans and Accell. The Belgian firm EVS combines a low valuation with good prospects regarding dividends and cash flows. The new management, under the leadership of CEO Serge Van Herck, also dares to use the extremely conservative balance sheet for acquisitions that may generate growth again in the long run. Fresenius, a German company, has seen its growth rate slow down in recent years, whilst its gearing ratio has remained high. We sold the stock after a strategic exercise by the management yielded inconclusive results. At Technotrans, we saw insufficient growth potential and the new strategy of management could not convince us.