A steady rise through the year ending 31 March 2025 has seen Duke Capital gradually deepen investor intrigue. With recurring cash inflows up approximately 6% to around £25.8 million, the firm is honing its role as a consistent income generator within the hybrid capital space. What at first glance looks modest hides a shift towards recurring, reliable revenue streams, a subtle sign of long-term resilience.
Despite total cash revenue easing back 12% versus the prior period, driven largely by a quieter exit market, Duke’s underlying operations remain intact. Free cash flow dipped to £12.6 million, somewhat lower than the £17.9 million of 2024, but still covers the full-year dividend of 2.80 pence. That distribution marks the 32nd consecutive quarter, underscoring the consistency investors prize in uncertain times.
Crucially, Duke continues to deploy meaningful capital into its core portfolio. Over £24 million invested in existing partners during the year, complemented by a successful £23.5 million equity raise in November 2024, highlights a clear strategy: double down on established relationships and back bolt-on acquisitions. Follow-on investments since the year-end, including a total of £5.3 million across New Path Fire & Security and Tristone Healthcare, underline a bias towards nurturing long-term value rather than fleeting exits.
This “stay in for longer” philosophy aligns with Duke’s emphasis on recurring revenue, a shift from event-driven gains to an annuity-style model. It’s a transition that, in a softer macro environment, starts to pay off. With inflation easing and rates expected to moderate, Duke stands to benefit from its income focus and defensive capital positioning.
Operational rigor is evident too: in FY25, cash cover per share stood at 2.83p, upholding the dividend and leaving room to flex its third-party funding line via Fairfax, which bolsters year-end cash reserves to an impressive £29.8 million. That balance sheet flexibility is key, enabling Duke to fund follow-on deals without entitlement to traditional syndication routes.
Of course, the challenge remains: net income slid sharply to just £2 million as fair value adjustments trimmed returns, and total revenue lagged exits. But for investors focused on yield and portfolio stability, this reflects a deliberate trade-off, sacrificing headline swings to prioritise recurring income and compounding over time.
Looking ahead, FY26 guidance anticipates around £6.6 million of recurring cash revenue in the first quarter alone, some 4% higher year-on-year, suggesting that Duke’s strategy is starting to firm anchor. With disciplined deployment, stable cash flows, and a clear preference for partner retention, the company is shaping a more resilient profile that speaks directly to conservative yield‑seeking investors.
In essence, Duke Capital is evolving. Far from chasing quick exits, it’s doubling down on its hybrid credit roots, committing to a model that blends private credit yield with selective equity upside. For investors positioning for yield in a world wary of volatility, Duke’s strategic pivot and financial discipline offer a quietly compelling narrative.
Duke Capital Limited (LON:DUKE), formerly Duke Royalty Limited, is a Guernsey-based provider of hybrid capital solutions for small and medium-sized enterprises (SME) business owners in the United Kingdom, Europe and North America, combining the features of both equity and debt.
