BP Marsh & Partners

Investors interested in a long-term asset play should look no further than niche venture capitalist BP Marsh (BPM), floated on AIM by way of a £10.1m placing at 140p in February. The company finances early-stage financial services concerns and is chaired by colourful former Lloyds underwriter Brian Marsh OBE.

Typically, it invests up to £2.5m in a venture, takes a minority stake and appoints a director to the board. Success to date is attributed to management knowledge of financial services, robust due diligence and a flexible exit strategy. Figures for the half to July revealed an impressive 16.7% spike in net asset value to £44.9m and improved pre-tax profits of £92,000 (£67,000).

This was a half in which a further £1.7m was invested in ‘multi-niche’ Lloyd’s insurance broking group Besso, where BPM holds 23.55%. The group also had a hand in a placing raising £5.1m for Hyperion, a fast-growing independent insurance group where BPM speaks for 27.9% of the shares. Elsewhere, £685,777 was invested in Summa, a consolidator of regional insurance brokerages in Spain, and a £2.5m loan from Mr Marsh himself was repaid in full.

Other investments made steady progress during the half, with the 22.5% held in actuarial consultant Paterson Martin, which made good out of US hurricanes, a particular stand-out, and six potential investments brought to advanced negotiations.

BPM has now used 43% of its float funds and expects to invest a similar amount in the second half, so investors should expect a further AIM funding round. Lack of news flow and low trading volumes have conspired to depress the share price. However, given that interim net assets were valued at £44.9m, giving net assets of 153.2p a share, the current price looks considerably under-cooked. Buy.