Equus Total Return Closed Fund (NYSE:EQS) is building its global network, leveraging increasing digitisation of corporate investment relations. The raising of standards, buoyed by ever-growing layers of regulation, make DIY solutions less attractive for many corporate investor relations departments and give EQS a larger pool from which to recruit clients. Continuing investment in the product suite and geographical reach has restrained returns through FY15 and H116, but margins should recover over the medium term. The rating is starting to reflect the progress, but still sits at a notable discount to peers.
Growing overseas revenues
In the H116 figures published in late August, the proportion of revenues generated outside Germany accounted for 28% of group, against 22% the prior year. The growth reflects both acquisition and organic expansion, with Obsidian IR in the UK and Tensid in Switzerland both contributing, while existing operations in both Russia and Asia delivered double-digit revenue growth. The group has also set up a small office in the US, which means it now has the foundations of a truly global network with which to service international clients and leverage its investment in its suite of software tools, growing its SaaS revenues. The expansion is being funded by a mix of cash flow and modest leverage to the balance sheet.
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