Augmentum Fintech (AUGM) released its annual results as of March 31, 2021 and announced proposals to 1) change its investment policy and 2) publish new ones Common stock and / or C shares in connection with a proposed share offering (including an initial issue of new common shares with a target of at least £ 40 million at an expected price of 135.5 pence).
The AUGM’s findings included the following summary of its financial performance and highlights from the Portfolio over the year.
- NAV per share rose by 12.3% to 130.4 pence (March 31, 2020: 116.1 pence).
- Not realized on an annual basis IRR of 19% on the invested capital (March 31, 2020: 18%).
- The total NAV increased 35% to £ 183.2 million (31 March 2020: £ 135.8 million).
- Generated gross proceeds of GBP 28.0 million through oversubscribed placement and sale offer in October 2020 (net proceeds GBP 27.5 million).
- Unrealized gains of £ 26.7m (2020: £ 12.m) across portfolio.
- A total of £ 15.4m invested in two new companies, ParaFi and Volt, and 11 existing portfolio companies (2020: £ 32.8m invested in three new companies and seven existing portfolio companies).
- An additional £ 15.5 million invested in two new companies (Cushon and Epsor) and four existing portfolio companies after the year ended.
- A total of £ 185.0m in equity raised by portfolio companies in the year (2020: £ 415).
- Interactive Investor completed the acquisition of Share plc in July 2020 and entered into an agreement to acquire the direct-to-consumer book from Equiniti Financial Services in March 2021.
- Grover secured 60.0 million euros in Series B financing and achieved a 2.5-fold increase in the annual subscription value over the previous year.
- Tide received a further grant of 25.0 million in September 2020 as part of the Banking Competition Remedies (BCR) grant program SMEs Banks to 6%.
- Onfido completed a Series C fundraiser of $ 100.0 million in April 2020 and saw annual recurring income growth of 82% year over year 2019-2020.
- Dext (formerly Receipt Bank) acquired Xavier and after the period ended the company’s stake in Dext was sold to Hg Capital for £ 10.5 million for gross sales of 30.5% internal rate of return.
Fintech is benefiting from a strong trend towards the digital economy
When describing the proposed changes to the investment policy and the issue of new shares, it is pointed out in the AUGM’s earnings report that “The manager continues to see a strong pipeline of investment opportunities and, as announced June 7, 2021, the company is considering issuing new common shares to fund additional investments with the aim of adding further value to the company Shareholders.
Next to it is the Read our guide to Boards and Directors" class="glossary_term">blackboard and the Manager recommend that the Company’s investment policy be modified to remove restrictions on the Company’s investments in companies in the seed phase. The total value of investments in the seed phase is no more than 1 percent. of Net Asset Value at cost and it is the Manager’s current intention that the initial investment in companies in the seed phase will be relatively small, typically less than £ 100,000. Separated to the company’s growth since initial public offering, the Board of Directors proposes to reduce the cash balance as a percentage of gross assets that the company intends to hold at any given time (mainly for follow-on investments) from 10-20% to 5-15%.
Each such initial issue is expected to have an issue price of 135.5p per new share of common stock and target proceeds of at least £ 40 million. The issue price corresponds to a bonus of 3.9 percent. on the NAV per ordinary share as of March 31, 2021 and a discount of 6.1 percent. until the closing mid-market price per common share on June 11, 2021 of 144.25 pence per common share (last business day prior to this announcement). One such fundraiser is expected to be the release of a brochure and further details will be announced in due course. “
Neil England, Chairman of AUGM, noted that “Fintech is benefiting from a strong trend towards the digital economy that accelerated during the pandemic. In October 2020 we generated net proceeds of £ 27.5m from an oversubscribed placement and retail offer. This has provided our manager with the necessary resources to continue adding exciting new fintech companies to the portfolio and making further investments in existing portfolio companies.
Our share price continued its strong recovery and the appetite for the company was great, as our premium to NAV, which has been consistently high since the end of 2020, shows. After the end of the year, we made our first investment in France with Epsor and also our first sale with the sale of Dext (formerly Receiptbank). “
View from the AUGM manager
Tim Levene, CEO of Augmentum Fintech Management (AUGM Manager) commented: “Our strategy remains to support some of the most exciting early stage and growth fintech companies in Europe that are revolutionizing the traditional financial services industry.
Our clear focus during the year was to make sure our portfolio was well funded and supported in these unprecedented times. We have worked closely with our portfolio companies’ management teams to ensure that they are well positioned to respond quickly and effectively to changes in their respective markets. Our portfolio performed well over the twelve months of the reporting period, with many of our companies showing record growth and successful completion of further financing rounds.
After seeing positive trading across the portfolio and completing our successful placement and retail offering in October, we focused again on investing in new and exciting opportunities. By the end of the period we had invested a total of £ 14.3m net in two new and 11 existing companies.
We continue to look for opportunities before new technologies are introduced into the mainstream fintech industry and this positions Augmentum at a time when more global institutional investors than ever are seeking access to European fintechs. This has led to valuation inflation in parts of the sector, but we remain price disciplined and theses driven, even if this sometimes has to be contrary.
We believe that the trend towards digital adoption will continue to gain momentum and we look forward to the diverse opportunities and relationships that are currently available to us. “
AUGM: Augmentum Fintech wants to grow and change its investment policy in order to build on a strong year
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