On Saturday, LAIQON announced a cash capital increase in order to secure further growth and expects 85% of its 20/24 convertible bond holders to convert into equity by end of May.

The cash capital increase without subscription rights (up to 5.7% or 1.0m shares) priced at € 6.25 per share should yield up to € 6.25m of gross proceeds (eNuW: c. € 6m net proceeds), assuming a full subscription, and is directed at three initiatives:

(1) Investments into efficiency program (eNuW: € 1m) should not only smooth internal processes, but more importantly should decrease OPEX while service quality should increase at the same time. In our view, LAIQON's group wide Digital Asset Platform 4.0 (DAP 4.0) already serves as a key enabler for the group's synergies, but with further investments, we see additional synergy potential to be realized.

(2) Expansion and further development of white label partner cooperations and its sales force (eNuW: € 4m). In our view, this should enable LAIQON to scale its products and services and offer them to a broader customer base, further securing AuM and thus sales growth.

(3) Implementation of an information security management system (ISMS - ISO 27001), also called the "banking standard", which should set LAIQON up for a new level of IT security and allows for intensified cooperation with customers and partners such as Union Investment (eNuW: € 1m).

Also, the last conversion window of the outstanding 20/24 convertible opened on May 3rd and should close on May 31st. Management expects a 85% conversion rate (20% already converted, 20% held by management and to be converted and 45% of other investors signalling a conversion), implying a cash-effective debt repayment of only € 0.75m, but also some 670k of new shares to be issued at € 4.85.

The cash inflow from the capital increase and the limited cash outflow from the outstanding convertible, should give LAIQON enough maneuverability to execute on the strategic growth initiatives. More importantly, the fact that investors signal interest to subscribe to new shares at a 26% premium to current levels (capital increase) and that 85% of convertible holders will likely convert to equity, shows LAIQON's current undervaluation, in our view.

Thus, we reiterate our BUY recommendation with unchangend PT of € 10.00, based on DCF.