Finance Conference Forward
Sofina venture capital is Fraser Perring’s next target
He became known as the “Wirecard hunter”, most recently betting on falling share prices in Grenke Leasing and Adler. Fraser Perring has now announced his next short target at the Finance Forward Conference in Hamburg
As soon as he landed in Hamburg, Fraser Perring was in his element. The British short seller, who became known as the “Wirecard hunter,” took a photo in front of the wanted poster for Jan Marsalek, the board member of the insolvent former Dax company Wirecard, who has been missing for almost two years, as soon as he arrived at the airport. He posted the photo on Twitter before attending a fintech party that night and, by his own admission, met “four people from my blacklist.”
Who the four alleged targets are, Perring kept to himself during the Finance Forward conference on Wednesday. But he dropped another bombshell: he announced a brief attack on the publicly traded Belgian investment firm Sofina.
In addition, his US-based company, Viceroy Research, will soon focus on a US-listed company “with ties to Germany and Russia.” Short sellers position themselves for falling stock prices, either by shorting a stock or through derivatives such as CDS.
Founded in 1898, Sofina invests in start-ups and venture capital funds in addition to established companies. According to Perring, one of these investments is also the reason for his short position in Sofina, namely the Indian company Byju’s. Founded by Byju Raveendran and Divya Gokulnath in 2011, the educational company is valued at $22 billion according to public sources and has 115 million registered customers. However, Perring is wary of official information. “They cheat people in India,” he said during his presentation in Hamburg.
Doubts about Byju’s rating
Perring expressed doubts about Byju’s valuation, not least because the company makes less money from educational offerings than it does from selling hardware. “They’re doing tablet sales that people can’t afford,” he said. If the Indian company is worth less, the valuation of Sofina’s share is also not justified. Before its announcement, the share was trading around 276 euros. At 4:30 pm, after Perring’s presentation, shares were down 8 percent.
“Sofina is not a scam, but her holdings are valued as if everything is perfect,” Perring told Capital. All competitors like Softbank are valued at a 30 to 40 percent discount to the valuation of their holdings. There is no reason for Sofina to be valued at such a premium over the share price. “The Byju’s example shows that the value of investments is highly questionable and even Byju’s employees express serious doubts about investing in video,” says Perring. “So even if you believe in Sofia, you have to look below the surface.”
According to Perring, Viceroy Research wants to sell short to other companies in the future. “We have a number of projects in Germany,” she said. Germany makes it easy for short sellers like him to find fraudulent companies anyway. “In Germany, even fraudsters keep their accounts,” he said.
Difficulties for fintech
The former social worker said they are still working on previous targets like Grenke Leasing and Adler Real Estate. “We’re not done with Grenke yet,” she said. The company depends on favorable refinancing, much of which comes from Turkey and Brazil. So how does the company want to keep growing if deposits are falling at the same time, as is currently the case, she said.
Adler believes that Perring is facing problems with the US Securities and Exchange Commission (SEC) because the company has listed bonds in New York. According to the latest reports, the KPMG auditors no longer wanted to audit the annual financial statements and the subsidiary Consus was threatened with additional write-downs.
As he said, Perring sees difficulties for numerous fintechs. “A lot of money has come into the industry, but half the companies are already on fire,” he said. Many of the technology-driven young financial service providers could face problems due to stricter customer identification rules.
So what should investors do? Perring is asked at the end. “You don’t have to short stocks,” she replies. “But you should at least avoid fraudulent companies.”