FSG — Foresight Group Holdings Limited

Foresight Group Holdings Limited (FSG.L) — deep-value analysis

Primary sources: Annual Report and Financial Statements FY26 (fiscal year ended 2026-03-31, auditor BDO LLP, signed 2026-06-26), Annual Report FY25, Annual Report FY24, Half-year Report for the half-year ended 2025-09-30, RNS “FY results for the financial year ended 31/3/2026” (2026-06-29), RNS “Sale of public markets division to GGI” (2026-06-11). Quotes and aggregate balance sheet: yfinance (FSG.L), 2026-08-25. All accounting figures are in GBP (thousands, unless stated otherwise); the price is quoted in GBp (pence). Currency caution: flows are in pounds, the price in pence — the conversion factor is 0.01.

Executive summary

The thesis. Foresight is a niche British fund manager, listed in the FTSE250 since February 2021, that collects recurring fees on … billion of fee-earning assets under management (FUM) out of a total of … billion AUM (AR26, p.26). 82.1% of FY26 revenue is recurring, 100% of AUM is long-duration capital (AR26, p.6), and the cost structure is almost entirely variable: 429 employees, …lion of property and equipment, and zero financial debt. From this near-immaterial asset base comes …lion of core EBITDA pre-SBP at a 41.6% margin and a ROE of 50.5% on continuing operations (calculation: continuing profit … / average equity …). The market pays 10.8× FY26 adjusted earnings per share for this and an 8.3% yield on normalized flow to the shareholder — below the median of UK asset-management peers (median P/E ~13.5× across ICG, Ashmore, Man Group, Schroders, Polar Capital; yfinance 2026-08-25), even though FSG has the second-highest ROE in the group.

What the headlines don’t show. Three things contradict the “consistent growth” story the annual report tells:

1. All the growth comes from a single division. Real Assets grew revenue from …M (FY24) to …M (FY26) and core EBITDA from …M to …M. Private Equity is stuck: revenue …M → …M → …M, while core EBITDA fell from …M (FY24) to …M (FY26), with the divisional margin down from 47.8% to 38.1% (AR26 note 5; AR25 note 5). The group is less diversified than it appears.
2. Institutional fundraising has collapsed. Institutionally raised funds fell from …lion (FY25) to …lion (FY26) — down 67% (AR26, p.10). Retail compensated (…M, the fifth consecutive record), but retail is tied to UK tax reliefs (VCT, Business Relief, ITS) that are a political decision, not a market function. Total gross fundraising fell from ~… billion to …lion.
3. The quality of statutory profit deteriorated, not improved. Net profit grew 81% from FY23 to FY26 (…M → …M) while operating cash flow fell 10% (…M → …M). The CFO/net profit ratio dropped from 2.17× to 1.08× over four years. The cause isn’t fraud, it’s accounting: the share-based payment expense fell from …M (FY24) to …M (FY26), and the …M impairment from FY25 didn’t recur. Almost the entire statutory profit jump in FY26 is explained by disappearing non-cash expenses, not more cash.

Estimated value. Five triangulated models give a range of … … …, with a median of … versus the … price. The Monte Carlo simulation (20,000 scenarios over the same DCF) gives a median of … and a …% probability of undervaluation — but that distribution only varies the DCF’s inputs, while the non-DCF anchors (no-growth earnings power value, the company’s own historical multiple) say today’s price already prices in growth. Believing management’s guidance (…M core EBITDA pre-SBP in FY29, reconfirmed at the 2026-06-29 results) gets you …; assuming no growth gets you ….

Verdict. A quality buy at a fair price, not a deep-value bargain. The business is real, aligned (the founder holds 28.1% and has no bonus, options or pension), cash-generative and debt-free. But the … price sits at the top of the historical trading range (FY22–FY26 averages: 417–…), the stock has risen 45% from its … low on 30 March 2026, and the margin of safety on conservative assumptions is practically zero. A medium-size position, adding below … — the level at which the company itself repurchased shares after the fiscal year closed (1,770,500 shares for …lion, average …; AR26 note 34). The total cash yield (5.4% dividend + ~1.7% net buybacks) pays for the wait.