Pollen Street Group Limited

Overview

An O’Neil-style investment analysis of Pollen Street Group Limited (LSE: POLN), a FTSE 250 alternative asset manager focused on private equity and private credit, assessing fundamentals, price/volume action, and CAN SLIM factors to decide if the stock is a BUY, HOLD, or SELL.

Financial and Business Overview

Pollen Street operates a dual-engine model: (1) an Asset Manager that earns recurring management fees, performance fees and carried interest from third‑party funds across Private Equity and Private Credit; and (2) an Investment Company that invests on-balance-sheet alongside its funds, generating investment income and aligning LP interests. H1 2025 results were strong: Total income £63.8m (+17% YoY), operating profit £30.9m (+28%), profit after tax £27.9m (+18%), and EPS 46.0p (+25% YoY). Fee-paying AuM rose 37% YoY to £4.7bn (Total AuM £6.1bn), driven by successful closes for PE Fund V (€1.5bn, >€2bn including co-invest) and strong fundraising/deployment for Private Credit Fund IV (PC IV), which exceeded its initial £1bn target by Q3 2025 (£1.1bn). Management fees grew 79% to £37.9m in H1, aided by £8.4m catch‑up fees (one-off and not expected in H2). Guidance reaffirmed: H2 fund management income will be lower due to no catch-up fees, performance fees to normalize towards the lower end of long‑term guidance (15–25% of FMI), fee‑paying AuM to continue rising with PC IV deployment, and Investment Company returns for FY25 expected in line with FY24. Capital returns have been meaningful: since Jan 2024 the group returned £70.6m (dividends and buybacks), including a 27.0p interim dividend and £29.2m buybacks; shares in issue declined to c.60.2m with 4.0m in treasury. Balance sheet/leverage: interest‑bearing borrowings ~£206m; tangible net asset value c.£357m; net debt-to-tangible equity ~56%. Valuation at c. 954p implies ~10.8x trailing P/E on TTM EPS ~£0.88 and an indicated dividend yield around mid‑single digits (c. 5–7%) based on recent run-rate dividends.

Market Position & Competitive Advantages

Pollen Street is positioned in secularly growing private markets, emphasizing mid‑market alternatives and asset‑based lending—areas benefitting from institutional demand, the UK Mansion House reforms, and the broader rotation into private credit. Advantages include: (1) Fundraising momentum and diversification: PE Fund V closed above target with a broadened LP base (North America/Middle East), PC IV surpassed its £1bn target by Q3. (2) Scalable, high‑margin recurring management fees: Fund management EBITDA margin reached 43% in H1 (aided by catch‑ups), with medium‑term ambition >50%. (3) On‑balance‑sheet investing supports AuM growth and alignment, while producing consistent mid‑ to high‑single digit underlying returns. (4) Strengthened governance/talent: new Chair (Lynn Fordham), new CFO (Crispin Goldsmith), and an Abu Dhabi office underpin expansion in key LP markets. Risks: fee cyclicality tied to fundraising and deployment; variability of performance fees; temporary equalisation effects depressing reported returns when funds scale; credit cycle sensitivity in private credit; valuation marks in private assets; leverage (~£206m) that needs disciplined risk management; and potential macro/regulatory changes that could slow LP allocations to alternatives.

Stock Performance

Price ~954p, within 2% of 52‑week high (972p) and ~50% above the 52‑week low (634p). The 50‑day (~904p) and 200‑day (~817p) moving averages are rising, with price above both—an O’Neil positive. 12‑month change ~+29% (structured data) and +16% per alternate source timing; near‑term technicals show constructive higher highs/higher lows and rising 50/200DMA slopes. Liquidity is adequate for a UK mid‑cap (avg 3‑month volume ~108k shares). The stock’s low beta profile and consistent uptrend contrast with prior multi‑year underperformance; relative strength has improved into new‑high territory.

CAN SLIM Analysis

Conclusion

In O’Neil terms, POLN shows rising EPS, strong AuM growth, several ‘New’ catalysts, improving RS near 52‑week highs, and favourable supply via buybacks—while trading at a reasonable multiple with a healthy cash return. Buy on constructive pullbacks toward the 50‑day (~900p) or on a clean breakout to new highs with strong volume. Reassess if H2/H1 comps reveal weakening organic fee growth ex catch‑ups, if PC IV momentum fades, or if price loses the 200DMA on heavy volume.