The year 2025 marked a period of exceptional growth for Blue Tower's investment strategy, demonstrating robust performance on both an absolute and relative basis compared to the broader market. This success was primarily fueled by the outstanding contributions of key holdings, Enova and Georgia Capital, whose strategic developments and market appreciation significantly boosted the portfolio. The firm also highlighted the emerging positive trend for value stocks and international equities, suggesting a favorable environment for its investment approach in the upcoming year.
Enova's Strategic Growth and Grasshopper Bank Acquisition
Enova experienced substantial organic growth in 2025, driven by a 22% year-over-year increase in originations during Q3. The company expanded its customer base to include new retail and business borrowers, while continuously refining its underwriting algorithms. These algorithms, frequently updated and often employing daily machine learning model retraining, automate 85% of underwriting decisions and significantly enhance repayment predictability compared to traditional bureau scores. A crucial aspect of Enova's success lies in its accumulating customer data, which serves as vital input for its data-driven underwriting processes. Furthermore, the company continued its aggressive share buyback program, reducing its share count by over 5% from Q3 2024 to Q3 2025, reflecting a long-term commitment to enhancing shareholder value.
The most impactful event for Enova's stock price in 2025 was the December announcement of its acquisition of Grasshopper Bank. This acquisition, valued at $369 million in cash and stock, is poised to be transformative for Enova, despite its market capitalization of $4.4 billion at year-end. The transaction is projected to be accretive to EPS, with guidance indicating an increase of over 25% once synergies are fully realized beyond the first year. Grasshopper Bank, established in 2019, operates as a full-service digital bank with total assets exceeding $1.4 billion and deposits of approximately $3 billion as of September 30, 2025. These low-cost, stable deposits will substantially reduce Enova's financing costs, thereby improving its net interest margin. The merger will create a diversified and more vertically integrated financial services platform, unlocking new business lines and expanding banking and lending product offerings across Enova's operational states. Even after a significant rise in share price, Enova's stock remained attractive, trading at approximately 9 times its consensus FY2027 earnings estimate.
Georgia Capital's Exceptional Performance and Future Outlook
Georgia Capital, a holding company with diverse, high-quality businesses in the Republic of Georgia, delivered an outstanding performance in 2025. The net asset value (NAV) of its portfolio companies saw rapid appreciation, complemented by aggressive share repurchases, which collectively boosted NAV per share by 41% (in GEL) within the first nine months of the year. Concurrently, the Georgian Lari (GEL) strengthened against the US Dollar by 4.36% in 2025, reflecting a robust national economy characterized by rising living standards and high GDP growth. These factors underscore the strong economic backdrop supporting Georgia Capital's operations.
Over half of Georgia Capital’s portfolio comprises private businesses whose valuations are determined by net income or EBITDA multiples. Rapid earnings growth within these private entities directly contributed to the increase in NAV. Additionally, Lion Finance Group PLC (formerly Bank of Georgia Group PLC), Georgia Capital's sole publicly traded holding, saw its share price double in 2025 due to strong growth and impressive earnings. The management team also focused on aggressive deleveraging, notably executing an early redemption of $100 million USD of its $150 million USD local bonds. Within its healthcare segment, the acquisition of Gormed LLC, which operates three clinics in central Georgia, expanded its market presence. The insurance business successfully navigated challenges by exiting loss-making contracts, enhancing underwriting practices, increasing premiums, and achieving improved combined ratios and high-30s returns on equity. Despite a dramatic increase in share price throughout 2025, Georgia Capital continued to trade at a discount to its most recent NAV, indicating ongoing value and suggesting its shares remained undervalued relative to the operating cash flow generated by its underlying businesses.