Kelso swings to profit; eyes "generational" small-cap opportunity

Kelso Group PLC on Wednesday said it remains confident in the opportunity presented by undervalued UK small and mid-cap companies, following the publication of its interim results and an update covering the first eight months of the year.

Kelso, a London-headquartered investment company focused on small and mid-cap UK businesses, swung to a pretax profit of £2.3 million for the half-year ended June 30, from a £55,000 loss a year earlier.

Pretax profit for the eight-month period ended August 30 was about £4.8 million.

Half-year evenue rose to £2.7 million from £369,000. This comprised realised investment gains of £1.2 million, compared with a £238,000 loss a year earlier, and unrealised gains of £1.5 million, up from £574,000, said the company.

Net asset value per share rose 26% to 2.9 pence at June 30, from 2.3p a year earlier, while net assets increased to £13.2 million from £10.3 million at the start of the year.

By August 31, NAV per share had risen further to 3.3p, representing a 43% increase since the start of the year.

Kelso attributed the improvement to its focused approach to investing in UK small- and mid-cap companies, its engagement with investee companies on capital allocation and investor relations, disciplined use of gearing, an experienced investment team, support from more than 75 business contacts, and its ability to invest and remain invested flexibly.

Chief Executive Nigel Knowles said: "Kelso has made a positive start to 2026, which we hope marks the beginning of sustained market-beating performance."

Kelso said it believes that "UK small and mid-cap market continues to offer a generational opportunity for enhanced returns."

The company said: "We are now seeing the green shoots of growth and, importantly, many of the smaller small cap funds are seeing healthy inflows. When small cap stocks begin to rally they can rally quite aggressively, which we have had the benefit of witnessing in three of our investments which have more than doubled in 2026.

"Our investment strategy has continued to evolve and improve. We hope that between now and the material buy back via tender offer envisaged above, we will achieve further material uplift to our NAV/share for our shareholders."

Shares in Kelso were up 2.6% at 3.59 pence per share on Wednesday afternoon in London.

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