I am not very worried about that refinancing risk, but I believe that Boreo will only properly continue its serial acquisition strategy—that is, buying new companies—once the earnings improvement actually comes through. At the current earnings level, our assessment is that the balance sheet’s leverage does not really allow for significant additional debt.
I wrote about the valuation gap between Boreo and Auroora in my initiation of coverage on Auroora, since you, Justus, have brought this up before.
“At this point, the valuation multiple range we accept for Auroora is (P/E 14–17x and EV/EBITDA 9–11x). The range is higher than the one we currently accept for the serial acquirer Boreo (P/E 12–15x and EV/EBITDA 8–10x). The key difference stems from the fact that in Auroora’s case, we are also pricing in the value creation of future acquisitions, as we estimate that the company has good opportunities to invest the funds raised in the IPO at a targeted ROCE of over 15%. On the other hand, the company’s historical track record is still relatively short, which limits the range we are willing to accept at this point in the story.”