REG-Augmentum Fintech Plc: Portfolio Update

Augmentum FintechAnnouncement

26/10/2020 07:05

26 October 2020

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LEI: 213800OTQ44T555I8S71

Augmentum Fintech plc

(the “Company” or “Augmentum Fintech”)

Period-end Portfolio Update

Portfolio overall has seen strong operational performance in volatile times

Augmentum Fintech plc (LSE: AUGM), the UK’s only publicly listed fintech
investment fund, today provides an update on the performance of its portfolio
companies for the half-year ending 30 September 2020.

The Company has a strong, diversified portfolio of eighteen private fintech
companies across a multitude of verticals. These companies are built upon
innovative technologies and are overhead-light, with lean and efficient
operations. These companies are typically agile, able to respond to changing
market conditions and are well-versed in remote working.

The Company has today separately announced its intention to conduct a placing
and retail offer of new ordinary shares in the Company to raise gross proceeds
of up to approximately £28 million (the “Fundraise”). The proceeds of the
Fundraise will be used to fund investments selected from the Company’s
near-term qualified pipeline, which currently contains approximately £120
million of investment opportunities across all target sectors and geographies,
and continues to grow.

This announcement provides a brief update on some of the key holdings in the
portfolio in the half-year ending 30 September 2020. Portfolio holdings
expressed as a percentage of NAV in this announcement are as at 31 March 2020.

The Company expects to publish its unaudited interim results for the period to
30 September 2020 in early December 2020. The Company does not carry any debt
on its balance sheet.

Interactive Investor (“ii”) (16.1% of NAV)

ii has continued to build well on strong foundations in 2020 delivering 62%
year-on-year growth in H1 revenues. A record number of new customers were
acquired in the first two quarters, exceeding the total number acquired during
the whole of 2019. This included a significant increase in younger investors,
with commensurate levels of new assets added to the platform. During the
pandemic, the majority of staff worked remotely, and all customers continued
to have full access to all services the group normally provides. On 3 July
2020, ii completed the part cash part share acquisition of Share plc and is
now working on migrating these customers onto the ii platform. Augmentum holds
ii at the valuation set in the Share plc transaction and, given the recent
nature of the Share plc transaction, does not currently expect to revise this
valuation in the Company’s forthcoming interim results.

Tide (10.5% of NAV)

Tide is an emerging leader in digital business banking.  In September 2020,
Tide (alongside its partner, Clearbank) was awarded a £25 million Banking
Competition Remedies (“BCR”) Pool E grant, in addition to the £60 Million
Pool A grant it was awarded in 2019. Tide/Clearbank is the only awardee to
have received two major grants from the BCR, recognising Tide's impact on
competition in the SME banking sector and its on-track performance with its
Pool A grant. The business has experienced strong growth in both revenue and
customer numbers in the past three months benefiting from the accelerated
digitisation trend during the pandemic. Tide passed 4% market share of
business accounts in September, a key milestone in the business’s growth -
and at the end of the September served almost 250,000 SMEs. To support its
continued growth, Tide has appointed Sir Donald Brydon as its first
independent Non-Executive Chair.  Sir Donald brings extensive experience to
the Board, previously chairing the London Stock Exchange, the Royal Mail and
Sage.

BullionVault (8.2% of NAV)

BullionVault has continued to perform strongly during the year, consolidating
its dominance of the ‘digital gold’ space for private investors. Amid the
financial uncertainty and lower interest rates spurred by the pandemic, growth
in new users set record demand for gold, silver and platinum, with price
volatility further contributing to dealing commissions on the company’s
platform. Pre-tax profit as at the end of August 2020 saw over 100% growth
YTD, demonstrating the platform’s underlying scalability.

Onfido (8.0% of NAV)

Onfido has continued its strong performance in 2020, providing ID Verification
to European and US fintechs. In April the company successfully completed a
$100m financing round led by US investment fund TPG Growth, and recently
announced Q2 revenue growth of 40% year-on-year driven in part by performance
in its US business. The company now aims to build out its vision for an
alternative “identity verification” layer of the internet with a new set
of use cases such as virtual voting through to health passports and digital
health wallets, now more relevant due to the pandemic. Onfido has received a
large number of industry accolades in the last 12 months including being
recognised as the number one tech innovator by FinTech50, being included among
Deloitte’s Technology Fast 50 and Business Insider’s Tech 100, being
awarded AI-Based Cybersecurity Solution of the Year for 2020 and being ranked
8th out of 100 fastest growing tech companies by Sunday Times TechTrack.
Onfido’s CEO Husayn Kassai was also named Young Entrepreneur of the Year in
this year’s Great British Entrepreneur Awards.

Monese (7.5% of NAV)

Monese has shown resilience in 2020 having just signed a strategic partnership
with Mastercard to deliver better local banking experiences to underserved
consumers across Europe and becoming a principal Mastercard issuer. In Q3,
Monese became the first European neobank to offer French and other individual
EU country IBANs to its customers and also more than doubled its cash top-up
network by launching thousands of new locations in Europe via a partnership
with Paysafe, creating one of the largest cash networks in the UK and Europe
with 87,000 cash top-up locations. In recent months, the company has reduced
its cost base as a result of a greater focus on sustainable growth. Volumes
have recovered from their covid lows, with an average customer moving 35% more
money in Q3 2020 vs Q3 2019.

Zopa (5.8% of NAV)

Zopa closed its £140 million funding round led by Silverstripe in May and was
consequently awarded its banking license in June of this year. This allowed
Zopa to launch its bank with a freshly capitalised, clean balance sheet at a
time when consumers were actively looking for products which better met their
needs. Since June, Zopa has successfully launched a fixed term savings product
and a credit card to address gaps in the market. Alongside this, demand has
returned for unsecured personal loans, the core of Zopa’s current lending
business. The combination of new product growth and the resurgence of demand
in its core category means that Zopa is now adding more new customers per
month than pre-covid, albeit still early days for the new strategy.

With more than £5 billion lent in personal loans since inception, and £1
billion in 2019 alone, Zopa’s P2P business has been profitable since 2016.
The new bank leverages Zopa’s strong lending track record, management
experience, data, technology and people to create a multi-product offering.

iwoca (5.6% of NAV)

The Bounce Back Loan Scheme (“BBLS”) provided more than £35 billion to
the SME market. This significantly reduced demand for iwoca's Flexi-Loan
leading to lower than expected revenues. iwoca was accredited in May as a
lender by the British Business Bank for the Coronavirus Business Interruption
Scheme (“CBILS”) and is on track to issue £150 million of loans as one of
the leading non-bank lenders under the scheme. This compensates for some but
not all of the loss of revenues due to BBLS. iwoca is well capitalised and
positioned to return to growth in 2021 as banks are likely to retrench from
SME lending once the Government schemes wind down leaving a large void for
iwoca to fill. iwoca also launched iwocaPay in June, an innovative B2B ‘buy
now pay later’ product to provide flexible payment terms to buyers while
giving peace of mind to sellers.

ReceiptBank (5.5% of NAV)

ReceiptBank entered the portfolio in January 2020 through Augmentum’s £7.5
million investment as part of a £55 million Series C fundraising, led by
Insight Partners, with participation from existing investors Kennet Partners
and Canadian Imperial Bank of Commerce (CIBC). In June the company acquired
data quality specialists Xavier, boosting the range of advisory tools offered
to accountants and bookkeepers and whose sales have since been ahead of plan
and have boosted top line growth.

Farewill (5.3% of NAV)

The business closed a £20m Series B fundraising round in April 2020 led by
leading growth investor Highland Europe. Augmentum participated in the round
with an additional £2.5 million investment. This leaves the business well
capitalised to meet their ambitious growth plans. The business has performed
strongly in 2020 with strong growth across all product lines, benefiting from
Covid-related market conditions. Three products are live: Wills, Probate and
Cremation with development efforts focused around further ‘planning for
death’ and ‘dealing with death’ products.

Grover (4.6% of NAV)

As the world stood still during the early part of 2020, Grover’s growth
continued as customers sought to acquire the digital equipment necessary for
home working and home entertainment. The business crossed the threshold of
Eur50m in annual subscription value in September with over 100,000 active
subscriptions, representing a 2.2x annual increase in recurring revenue. More
than 95% of the business is now committed to a rental plan of 3 months or
more. In January the business extended its existing credit facilities to
Eur250 million through Varengold Bank paving the way for growth. Augmentum’s
investment in Grover is expected to convert into equity on completion of its
next funding round.

Habito (3.7% of NAV)

As in-person house viewing stopped with the first lockdown, mortgage
origination slowed, causing Habito to shift its focus to remortgages. The
company cut deep into marketing and operating costs to weather the crisis,
reducing expenses and cutting non-core business lines. Since emergence from
lockdown and with the government's introduction of temporary Stamp Duty
relief, activity in the property market has resumed. Coupled with the
associated shift to digital, Habito experienced a record revenue month in
August. Its home-buying service has continued to perform well and its own
origination levels have strengthened. In August the business announced the
successful close of its £35m series C, with the addition of new investors SBI
Group and Mojo Capital.

Tim Levene, Portfolio Manager, commented “We are pleased with the
performance of our portfolio and the adaptability and resilience of our
individual portfolio companies over an unprecedented period. We firmly believe
that Augmentum has a diversified, balanced and robust portfolio which is
well-positioned to weather market changes that have been introduced or
accelerated as a result of the pandemic. Whilst the pandemic has introduced
opportunities and challenges across the individual portfolio companies,
overall the portfolio has been tracking our operational and financial
expectations since the Annual Results were published in July and we look
forward to continued progress in the future.”

End

For further information, please contact:

 Augmentum  Tim Levene, Portfolio Manager Nigel Szembel, Investor Relations                         +44 (0)20 3961 5420 +44 (0)7802 362088 nigel@augmentum.vc  
 Peel Hunt LLP  Liz Yong, Luke Simpson, Tom Pocock (Investment Banking)                             +44 (0)20 7418 8900                                        
 Nplus1 Singer Capital Markets Limited  Harry Gooden, Robert Peel, James Moat (Investment Banking)  +44 (0)20 7496 3000                                        
 Frostrow  Victoria Hale, Company Secretary                                                         +44 (0)20 3170 8732 info@frostrow.com                      

Notes to Editors

Augmentum Fintech invests in fast growing fintech businesses that are
disrupting the financial services sector. Augmentum Fintech is the UK’s only
publicly listed investment company focusing on the fintech sector in the UK
and wider Europe, having launched on the Main Market of the London Stock
Exchange in 2018, giving businesses access to patient capital and support,
unrestricted by conventional fund timelines and giving public markets
investors access to a largely privately held investment sector during its main
period of growth.



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