Back in June I wrote my article "GSV Capital: Large Discount To NAV With Upcoming Catalysts" which named the Twitter IPO as an upcoming catalyst for realizing a narrowing of the discount to NAV the GSV Capital (NASDAQ:GSVC) shares traded at, then.
This thesis played itself exactly as expected. As news of the Twitter IPO started getting out, GSVC went on a rampage going from $8.12 when I wrote my article to $14.18 right now.
With most of the expected appreciation already having taken place, this is the time to quantify just how much NAV impact can GSVC get from the Twitter IPO.
Impact from Twitter IPO
As of June 30, GSVC had a NAV of $12.87 per share. It also carried an investment in Twitter of 1,835,600 shares, valued at $36,351,602. That's $19.80 per share. It also carried $1,287,238 in Twitter preferred shares, Series A, whose conditions we are not privy to (Source: 10-Q).
Twitter accounted for 15.14% of GSVC's net assets.
Lately, new information came out indicating that Twitter is expected to IPO at $28-$30 per share, for a valuation of $15-$16 billion, and for a total IPO size of $1.4-$1.65 billion.
Given how hot Bernanke's pet market is and how few Twitter shares will be coming to market, it's not unrealistic to expect these shares to appreciate 50-100% in their first market session. This would put the Twitter shares at $45-$60.
Impact with Twitter @ $45
If Twitter rises to $45, GSVC's shareholding will be worth $82.6 million, an additional $46.25 million over what it's booked for right now. Given GSVC's 19.32 million shares outstanding, GSVC's NAV per share would increase by $2.40.
Impact with Twitter @ $60
If Twitter rises to $60, GSVC's shareholding will be worth $110.1 million, an additional $73.8 million over what it's booked for right now. Given GSVC's 19.32 million shares outstanding, GSVC's NAV per share would increase by $3.82.
Summing it up
Starting from a June 30 NAV per share of $12.87, GSVC should see its NAV inflate to $15.26-$16.69. This would still be a premium of 7.6%-17.7% versus today's quote.
The impact of Twitter IPO'ing at $30 per share and then trading up 50%-100% in its first market session would be to, all other things being equal, drive GSVC's NAV per share to $15.26-$16.69. While this would still represent a premium over today's GSVC market quote ($14.18), I would expect GSVC to continue trading at a discount to its NAV. Thus, I believe most if not all of the effect of Twitter's IPO is already in GSVC's market price.
Timing-wise, the latest one should sell GSVC would probably be the first market session where Twitter trades in the open market. In or right after that session it's likely that GSVC will be sold on the news.