Chris Swasbrook presented his in-depth investment thesis on De La Rue (London: DLAR) at European Investing Summit 2015.

De La Rue is the world’s largest commercial banknote printer and passport manufacturer, involved in the production of over 150 national currencies, and passports or identity systems for over 65 countries. De La Rue is one of the most recognized and highly regarded names in the currency printing business, as it has established an unparalleled reputation over the past 200 years. Recent overcapacity in the banknote industry, caused by increased longevity of banknotes and state-owned suppliers entering the commercial market is creating a challenging operating environment for commercial printers like De La Rue. Its share price has declined more than 50% in the last three years (£4.83 on 30/9/2015), significantly lower than a rejected 2011 takeover price of £9.35. Chris believes investors are overly pessimistic on the company’s commercial banknote printing business, while at the same time uncertain about the company’s future growth opportunities and its diversification efforts. Chris sees the most clear and present opportunity for an investment in De La Rue to be a takeover scenario. An offer from Oberthur (or other) forms a large part of the valuation, and Chris perceives a high probability of an offer being presented. He values De La Rue in a takeover scenario at £7.76 (with a conservative EV/EBITDA multiple of 9.6x), or at £8.47 (with an optimistic EV/EBITDA multiple of 10.3x).

About the instructor:

Chris Swasbrook is Managing Director and Portfolio Manager of Elevation Capital Management Limited a global investment manager based in Auckland, New Zealand. He was previously a Partner of Goldman Sachs JBWere Pty Limited and Co-Head of Institutional Equities at Goldman Sachs JBWere (NZ) Limited. Chris is a member of the NZX Listing Sub-Committee and a member of the NZ Markets Disciplinary Tribunal. He is also a Director of NZX listed – Mowbray Collectables Limited. Chris graduated from The University of Auckland with a BCom (Economics) in 1995.

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