REG-Augmentum Fintech plc: Half-year Report
26/11/2024 07:00
26 November 2024
Augmentum Fintech plc
Interim Results for the six months ended 30 September 2024
Augmentum Fintech plc (LSE: AUGM) (the "Company" or "Augmentum"), Europe's
leading publicly listed fintech fund, announces its unaudited Half Year
Results for the six months ended 30 September 2024.
Financial highlights
• NAV per share after performance fee1 of 164.3p (31 March 2024: 167.4p).
• IRR of 14%2 on invested capital since inception (31 March 2024: 16%).
• Available cash of £34.8 million3 with no debt (31 March 2024: £38.5
million).
• The asset value of the top four positions (Tide, Zopa Bank, Volt, and
Grover) plus cash exceeds the market capitalisation, taking no account of the
remaining 22 portfolio companies (with a current valuation of £119 million).
Portfolio and investment highlights
• As at 30 September 2024, the portfolio comprised 26 companies.
• Seven exits since inception, realising an IRR of 38.4%4.
• The top 10 holdings represent 77.5%5 of NAV, have aggregate revenue of
£1.25 billion and year-on-year revenue growth of 52%.
• Of the top 10 holdings, four have reached profitability and the remaining
six have an average of 16 months of cash runway.
• The acquisition of portfolio company Onfido by Entrust was completed in
April and the Company received proceeds of £9.9 million from the sale,
delivering an IRR of 5.8% and a multiple on capital invested of 1.3x.
Investment activity
• In June the Company made a £2.6 million investment in LoopFX, a new
independent venue for large spot FX trades with a unique matching solution for
market participants that enables traders to match, in real-time, with other
asset managers and banks without information leakage and at a mid-market rate,
reducing trading costs and improving best execution processes.
• The Company made follow-on investments into Tide (£2.0 million),
Grover (£1.5 million), Anyfin (£0.8 million), Artificial (£0.8 million),
Baobab (£0.6 million) and WeMatch (£0.4 million).
• The Company also invested £2.5 million to support the spin-out from
Monese of XYB, the banking-as-a-service (“BaaS”) platform; the Company
subsequently increasing its stake in XYB with a £1.0 million secondary
transaction.
Post period end
• In October, nCino, the NASDAQ listed US digital banking platform, agreed
to acquire portfolio company FullCircl. The transaction valued the Company’s
investment in FullCircle at £6.2 million, representing an 80% increase on the
valuation as at 31 March 2024.
• The proposed acquisition of portfolio company Farewill by Dignity (in
which Castelnau Group plc has a controlling stake) was also announced in
October, through which Augmentum will receive shares in Castelnau Group plc as
consideration for the transaction. The Board has made a non-material change to
the investment policy to allow for the Company to receive these shares, as set
out in the interim report.
• The Company welcomed William Reeve as an Independent Non-Executive
Director of the Company and Chairman of the Board, with effect from 1 November
2024. Reeve will also serve on the Company's Nominations, Audit, Valuations
and Management Engagement & Remuneration Committees, and will chair the
Nominations Committee.
• The Company announced that it had led a US$7.0 million funding round with
a US$4.0 million investment into UAE-based Pemo in November. The company
provides an expense management and business payments solution, via corporate
cards, to SME businesses in the UAE, where SMEs spend $122 billion annually
and where currently only 1.7% of payments are on corporate cards.
Notes
1. The Board considers NAV per share after performance fee to be the most
appropriate measure of NAV per share attributable to shareholders.
2. Annualised IRR on invested capital and realisations since inception using
valuations at the last reporting date before performance fee.
3. As at 22 November 2024.
4. Excludes Farewill as on completion of the transaction, expected in early
2025, Augmentum will have a continuing investment in Castlenau Group plc.
5. 77.5% of net assets after performance fee.
William Reeve, Chairman of Augmentum Fintech plc commented: “European
fintech is an extremely exciting growth sector, with some businesses now
reaching impressive scale. Indeed, the combined revenues of the top 10 largest
businesses in our portfolio have now passed the £1 billion mark, which is an
exciting milestone to be announcing in my first set of results.
“Augmentum has proved its model through its successful realisations to date,
which have generated an IRR before costs of 38% and 2.6x capital invested. We
believe our portfolio, our people and the opportunities in front of us
position us well for future growth.”
Tim Levene, CEO of Augmentum Fintech Management Limited commented: “This is
another period where underlying growth across our portfolio remains strong.
Across our top 10 positions, representing nearly 80% of NAV, revenues have
grown 52% over the last 12 months. Since listing we have delivered almost
£100 million in realisations at an average premium of 33%, and expect
significant capital growth over the long term. The asset value of our top
four positions plus cash exceeds our market capitalisation, and with a further
22 assets in the portfolio, we are confident that patient investors will be
rewarded over time.”
Enquiries
Augmentum Fintech Tim Levene (Portfolio Manager) Georgie Hazell Kivell (Investor Relations) +44 (0)20 3961 5420 georgie@augmentum.vc
Quill PR Nick Croysdill, Sarah Gibbons-Cook (Press and Media) +44 (0)7815 823412
+44 (0)7702 412680
press@augmentum.vc
Peel Hunt LLP Liz Yong, Huw Jeremy (Investment Banking) +44 (0)20 7418 8900
Singer Capital Markets James Moat, James Fischer (Investment Banking) +44 (0)20 7496 3000
Frostrow Capital LLP Paul Griggs (Company Secretary) +44 (0)20 3709 8733
About Augmentum Fintech
Augmentum invests in fast growing fintech businesses that are disrupting the
financial services sector. Augmentum 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.
.
---------------------------------------------------------------------------------------------------------------------------------------------
Augmentum Fintech plc
Half Year Report for the six months ended
30 September 2024
.
Chairman’s Statement
Introduction
This report covers your Company’s progress in the six months to 30 September
2024 and its financial position at that date.
Investment Strategy
Your Company occupies a unique position amongst publicly listed funds,
investing solely in early stage European fintech businesses - a growth sector
that the UK/Europe have particular strengths in. Our portfolio businesses are
disruptive to and/or help to digitalise the traditional financial services
sector. A typical investment will offer the prospect of high growth and the
potential to scale.
Our objective is to provide long-term capital growth to shareholders by
offering them exposure to a diversified portfolio of private fintech companies
during their period of rapid growth and value creation. Our Manager aims,
before costs, to generate a long term Internal Rate of Return (“IRR”) of
20% on invested capital and for cash invested to return on average 3x at exit.
In practice, successful venture capital portfolios can expect to see a wide
range of exit multiples, and rely for their strong returns on the outsized
winners – which are usually rare.
Performance in the period
The top 10 holdings, which represent 77.5% of net assets after performance
fee, have total annual revenue of £1.25 billion, and grew total revenue by
52% year-on-year. Four of these positions are cash generative and the other
six have an average of 16 months of cash runway.
At 30 September 2024, our NAV per share* stood at 164.3p, a drop of 1.9% from
the 31 March 2024 figure, 167.4p.
The half year saw a wide range of valuation movements. The majority of the
portfolio’s positions made gains, the strongest being Tide, continuing its
strong growth, XYB (which was spun out from Monese in May 2024), BullionVault,
FullCircl, Iwoca, Tesseract and Anyfin. However, we wrote down several
holdings, the effect of which, together with adverse foreign exchange
movements, offset the gains elsewhere. The most significant write downs were
Grover and Farewill.
Your Board considers its governance role in the valuations process to be of
utmost importance. Together with our advisers we consider and challenge all of
the investment valuations used for the full and half year financial
statements. We have carefully reviewed both the status and the forecasts for
all of the portfolio companies. The valuations have been arrived at using
appropriate and consistent methodologies, and we sense check and debate our
conclusions on the assets themselves and their market context. Also, we
benefit from some of our investments occupying a senior position in the
capital structures of these companies, providing some protection against
downside risk.
Our share price rose 1.5% to 102.0p at 30 September 2024. However, this still
significantly under-represents the NAV per share, with the discount to the NAV
per share after performance fee at 37.9%. As at 30 September 2024, the
valuation of our top four positions in Tide, Zopa Bank, Volt, and Grover, plus
cash, was above our market capitalisation, attributing no value to our
£119 million of other investments.
* NAV per share after performance fee
Portfolio and Transactions
We have built a balanced portfolio diversified across different fintech
sectors, European markets and maturity stages. As at 30 September 2024, the
portfolio stood at 26 companies.
We are committed to a responsible investment approach, believing that the
integration of environmental, social and governance factors helps to mitigate
risk.
We are active investors with a team that works closely with the companies we
invest in, typically taking either a board or an observer seat and working
with management to guide strategy consistent with long-term value creation.
In the period, the Company received proceeds of £9.9 million from the sale of
Onfido to Entrust, one of the leading global providers of online identity
verification, delivering an IRR of 5.8% and a multiple on capital invested of
1.3x.
Since 30 September, nCino, the NASDAQ listed US digital banking platform,
agreed to acquire FullCircl. This transaction implied an enhanced valuation of
the Company’s investment in FullCircl, of £6.2 million, which represents an
80% increase on the valuation as at 31 March 2024.
These realisations continue the Company’s record for investment exits all
being at or above the last reported holding value, which should provide
investors with further comfort that our valuations process is rigorous and
corroborates the discipline our Portfolio Manager has exercised when
evaluating new investments and their reporting on the portfolio.
Also since the year end funerals group Dignity (in which Castelnau Group has
a controlling stake) agreed (subject to regulatory approval) to acquire
Farewill in exchange for shares in Castelnau Group plc. Accordingly the
Company’s investment in Farewill will continue, for a time, via the
Castelnau Group shares. Completion of this transaction is not expected to
occur before 1 January 2025. Additionally, Monese has been acquired by Pockit,
a financial services business for the “unbanked” (subject to FCA
approval), with the Company retaining a shareholding in the newly merged
entity.
There was one new investment in the period. In June the Company made a £2.6
million investment in LoopFX, a new independent venue for large spot FX trades
with a unique matching solution for market participants. LoopFX enables
traders to match, in real-time, with other asset managers and banks without
information leakage and at a mid-market rate, reducing trading costs and
improving best execution processes.
Since 30 September 2024 the Company has made another new investment, with a
US$4 million investment in UAE-based Pemo, which provides corporate expense
card management.
During the period under review the Company also made follow-on investments to
support several companies in the portfolio , including Tide (£2.0 million),
Grover (£1.5 million), Anyfin (£0.8 million), Artificial (£0.8 million)
and Baobab (£0.6 million). The Company also helped to fund (with £2.5
million) the spin out from Monese of XYB, the banking-as-a-service
(“BaaS”) platform, and subsequently increased its stake in XYB with a
£1.0 million secondary transaction.
The Portfolio Manager’s report, beginning on page 7, includes a detailed
review of the portfolio, individual company performance and investment
transactions in the period.
Investment Policy
The Farewill transaction mentioned above highlighted that the Company’s
investment policy did not make specific provision for the circumstance of a
portfolio company being acquired in a share for share transaction with a
lock-in on the shares taken as consideration. Accordingly, the Board has made
a non-material update to the investment policy to cover such events, which do
happen from time to time in the world of private technology investing (see
underlining on page 4).
Cash reserves
The use of our cash reserves is a matter of regular Board review. We aim to
balance the benefits of highly accretive buybacks when discounts are high
against ensuring that we hold appropriate reserves to fund follow on
investments and capture the best of the new investment opportunities that we
continue to see.
As reported above, the Company’s shares continued to trade at a discount to
NAV during the period under review and up to the date of this report. Buybacks
are one of several mechanisms your Board actively considers to help to reduce
this discount.
We continued to buy back shares in the period under review. All shares
purchased by the Company are being held in treasury and will potentially be
reissued when the share price returns to a premium.
2,076,814 shares were bought back into treasury during the six months to 30
September 2024, at an average price of 105.8p per share, representing an
average discount to the 31 March 2024 NAV after performance fee of 36.8% and
accreting 0.8p per share. A further 378,543 shares have been bought back
since September, at an average price of 100.5p per share, representing an
average discount to the updated NAV after performance fee as at 30 September
2024 of 38.8%.
Outlook
Although early stage growth portfolios have been out of favour since 2022, the
need to digitalise and transform last century’s infrastructure remains, as
nearly all financial services sectors continue to be dominated by traditional
businesses whose operations cannot ignore the rapid development of less
costly, and in many cases more secure, business models and technology.
Augmentum has proved its model through the successful realisations to date,
which have generated (before costs) an IRR of 38% and 2.6x capital invested,
and we believe our portfolio, our people and the opportunities in front of us
position us well for future growth in Net Asset Value.
William Reeve
Chairman
25 November 2024
.
Investment Objective and Policy
Investment objective
The Company’s investment objective is to generate capital growth over the
long term through investment in a focused portfolio of fast growing and/or
high potential private financial services technology (“fintech”)
businesses based predominantly in the UK and wider Europe.
Investment policy
In order to achieve its investment objective, the Company invests in early or
later stage investments in unquoted fintech businesses. The Company intends to
realise value through exiting these investments over time.
The Company seeks exposure to early stage businesses which are high growth,
with scalable opportunities, and have disruptive technologies in the banking,
insurance and wealth and asset management sectors as well as those that
provide services to underpin the financial sector and other cross-industry
propositions.
Investments are expected to be mainly in the form of equity and equity-related
instruments issued by portfolio companies, although investments may be made by
way of convertible debt instruments. The Company intends to invest in unquoted
companies and will ensure that the Company has suitable investor protection
rights where appropriate.
The Company may also invest in partnerships, limited liability partnerships
and other legal forms of entity. The Company will not invest in publicly
traded companies. However, portfolio companies may seek initial public
offerings from time to time, in which case the Company may continue to hold
such investments without restriction. The Company may also hold securities in
publicly traded companies, including non-fintech companies, that have been
received as consideration for the Company's holding in a portfolio company
("Listed Consideration Securities").
The Company may acquire investments directly or by way of holdings in special
purpose vehicles or intermediate holding entities (such as the Partnership*).
The Management Team has historically taken a board or board observer position
at investee companies and, where in the best interests of the Company, will do
so in relation to future investee companies.
The Company’s portfolio is expected to be diversified across a number of
geographical areas predominantly within the UK and wider Europe, and the
Company will at all times invest and manage the portfolio in a manner
consistent with spreading investment risk.
The Management Team will actively manage the portfolio to maximise returns,
including helping to scale the team, refining and driving key performance
indicators, stimulating growth, and positively influencing future financing
and exits.
Investment restrictions
The Company will invest and manage its assets with the object of spreading
risk through the following investment restrictions:
• the value of no single investment (including related investments in group
entities or related parties) will represent more than 15% of NAV, save that
one investment in the portfolio may represent up to 20% of NAV;
• the aggregate value of seed stage investments will represent no more than
1% of NAV;
• at least 80% of NAV will be invested in businesses which are
headquartered in or have their main centre of business in the UK or wider
Europe; and
• the aggregate value of holdings of Listed Consideration Securities may
not exceed 2.5% of NAV.
In addition, the Company will itself not invest more than 15% of its gross
assets in other investment companies or investment trusts which are listed on
the Official List of the FCA.
Each of the restrictions above will be calculated at the time of investment
and disregard the effect of the receipt of rights, bonuses, benefits in the
nature of capital or by reason of any other action affecting every holder of
that investment. The Company will not be required to dispose of any investment
or to rebalance the portfolio as a result of a change in the respective
valuations of its assets.
For the purposes of the investment policy, “NAV” means the consolidated
assets of the Company and its consolidated subsidiaries (together “the
Group”) less their consolidated liabilities, determined in accordance with
the accounting principles adopted by the Group from time to time.
Hedging and derivatives
Save for investments made using equity-related instruments as described above,
the Company will not employ derivatives of any kind for investment purposes,
but derivatives may be used for currency hedging purposes.
Borrowing policy
The Company may, from time to time, use borrowings to manage its working
capital requirements but shall not borrow for investment purposes. Borrowings
will not exceed 10% of the Company’s NAV, calculated at the time of
borrowing.
Cash management
The Company may hold cash on deposit and may invest in cash equivalent
investments, which may include short-term investments in money market type
funds and tradeable debt securities.
There is no restriction on the amount of cash or cash equivalent investments
that the Company may hold or where it is held. The Board has agreed prudent
cash management guidelines with the AIFM and the Portfolio Manager to ensure
an appropriate risk/return profile is maintained. Cash and cash equivalents
are held with approved counterparties.
It is expected that the Company will hold between 5% and 15% of its Gross
Assets in cash or cash equivalent investments, for the purpose of making
follow-on investments in accordance with the Company’s investment policy and
to manage the working capital requirements of the Company.
Changes to the investment policy
No material change will be made to the investment policy without the approval
of Shareholders by ordinary resolution. Non-material changes to the investment
policy may be approved by the Board. In the event of a breach of the
investment policy set out above or the investment and gearing restrictions set
out therein, the Management Team shall inform the AIFM and the Board upon
becoming aware of the same and if the AIFM and/or the Board considers the
breach to be material, notification will be made to a Regulatory Information
Service.
* Please refer to the Glossary on page 34.
.
Portfolio
as at 30 September 2024 Fair value of Net Impact of FX rate changes Investment Fair value of % of
holding at investments/ £’000 return holding at Net assets
31 March (realisations) £’000 30 September after
2024 £’000 2024 performance
£’000 £’000 fee
Tide 51,293 2,000 - 6,422 59,715 21.7%
Zopa Bank^ 39,291 - - 55 39,346 14.3%
Volt 25,458 - - (164) 25,294 9.2%
Grover 35,893 1,519 (1,026) (16,759) 19,627 7.1%
BullionVault^ 13,119 - - 1,805 14,924 5.4%
XYB 7,135 3,500 - 3,994 14,629 5.3%
Anyfin 9,415 843 (273) 1,081 11,066 4.0%
Intellis 10,074 - (280) 219 10,013 3.6%
Iwoca 7,926 - - 1,690 9,616 3.5%
Gemini 10,924 - (610) (1,022) 9,292 3.4%
Top 10 Investments 210,528 7,862 (2,189) (2,679) 213,522 77.5%
Other Investments* 44,407 4,728 (1,175) (1,748) 49,708 18.0%
Onfido 10,148 (9,930) - - 218 0.1%
Total Investments 265,083 2,660 (3,364) (931) 263,448 95.6%
Cash & cash equivalents 38,505 31,775 11.5%
Net other current liabilities (271) (588) (0.2)%
Net Assets 303,317 294,635 106.9%
Performance Fee accrual (18,980) (19,000) (6.9)%
Net Assets after performance fee 284,337 275,635 100.0%
NAV per share (pence) 178.6 175.6
NAV per share after performance fee (pence) 167.4 164.3
^ Held via Augmentum I LP
* There are sixteen other investments (31 March 2024: fourteen). See from
page 17 for further details.
.
Portfolio Manager’s Review
Overview
In June, we shared an upbeat market outlook with the expectation that central
banks were preparing to embark on a series of rate cuts. The first rate
reductions made by the BoE and FED in Q3, and the earlier actions of the ECB
in Q2, did provide a welcome boost to equity markets. However, expectations
around the timing and depth of further cuts has since adjusted. At the time of
writing, the FED and BoE have each delivered a further cut but also restated
forward looking caution, with the potential impacts of US and UK policy
changes on inflation as yet unclear.
While the second half of the year has been more subdued than anticipated, we
remain optimistic. Greater clarity following election and budget outcomes has
already helped to restore some investor confidence, particularly in US
markets, and while central banks have signalled caution, the macroeconomic
backdrop has markedly improved since this time last year. Assuming inflation
can continue to be managed, we should see further cuts in 2025 and with this a
fuller return of market confidence and demand.
Despite ongoing inertia in public markets, listed fintechs have navigated
valuation recovery and stabilisation in 2024, although these are yet to be
fully reflected across the sector. In response to market conditions, listed
firms have prioritised profitability over growth, and a flight to quality
dynamic has rewarded exceptional companies whose capital efficiency has seen
them continue to deliver both. Listed fintech approaches 2025 on a surer
footing than it did in 2024, with positive spillover effects in private
markets, where investment activity has returned to the long-term trend. Across
Europe, healthy levels of dry powder and strong local ecosystems continue to
support high-potential fintechs from idea through growth stages.
Many exceptional European fintechs have completed long journeys to scale and
profitability, but still today remain private, including a growing number of
the Company’s portfolio companies. These firms collectively form a mature
cohort with exciting exit prospects in the near to mid-term. Such cases have
required patience from early investors but hold the promise of ample reward
upon realisation. The focus now is on ensuring that exits are delivered at
deserved market premiums. Many of these firms have taken 2024 as an
opportunity to prepare for listing in 2025 and beyond. However, M&A remains
the dominant exit route for fintech firms with 98% of all fintech exits since
2020 completed through this approach, of which 85% during 2023 and Q1 2024
were strategic acquisitions from incumbent financial services firms (source:
FT Partners). With access to the right portfolio and an experienced manager, a
private market strategy will reward investors for progress made while private,
and ensure value is maximised in exit scenarios. While companies continue to
perform, and market conditions are improving, continued patience in these late
stage positions is the rational approach.
For policy makers across our key markets of focus, growth agendas are the
order of the day. This bodes well for the fintech sector as a leading
recipient of investment capital, and a driver of productivity growth and job
creation. In the UK, fintech continues to be regarded as a jewel in the crown
and recently surpassed a valuation of US$1 trillion, to join only the US and
China at this scale (source: Dealroom). Productive engagement, and the
supportive policy and regulatory environments in the UK have continued under a
new Labour government. Despite the additional costs for businesses introduced
in the budget, the UK remains a highly attractive location for starting and
scaling fintech firms.
We have adapted to the higher rate environment by focusing our investment
strategy on high potential early stage prospects, while the Company’s
existing portfolio continues to demonstrate underlying growth. The investment
pipeline we have cultivated with a technology-led approach is of high quality,
and our ability to win deals in competitive processes - supported by our
reputation as one of Europe’s leading fintech investors - has only improved.
With our recent exit of FullCircl we continue to deliver realisations to
investors, and aim to secure market premiums when we do. Coupled with
improving market conditions, albeit at a slower pace than we would like, the
maturity in the portfolio today makes us confident that late 2025 and beyond
will bring significant rewards for patient investors who have stayed with us
through the course.
Portfolio Overview
The Company’s portfolio continues to demonstrate encouraging growth with our
26 companies advancing across a diverse mix of financial services verticals.
Growth over the past 12 months across our Top 10 positions (which represents
nearly 80% of NAV) has been 52%, while four of this group have reached
profitability. At the time of writing, we again find ourselves in the position
of having the asset value of the Top 4 positions, plus cash, exceeding the
portfolio value implied by the Company’s market capitalisation. This
underscores the untapped option value of 22 additional assets.
The portfolio approach continues to be important; within the Top 10 the robust
performance of many companies balances the emergence of headwinds for a
minority. It is a hallmark of high-growth assets, that the path to success is
rarely linear. The likes of Zopa and iwoca, have experienced turbulent times
in the past but have successfully navigated their way through to become scaled
and profitable businesses today. The next generation of our portfolio also
continues to develop, including through new investments and exit events.
Outside of the Top 10, several earlier stage companies have the potential to
reach scale independently, or to realise value at an earlier stage through
acquisition. The latter was the case for two of the portfolio’s earlier
stage companies, Farewill and FullCircl, which have entered agreements to be
acquired just after the reporting period. These acquisition events complement
our major exits, releasing capital and team time towards propositions with
higher growth potential in our pipeline and the existing portfolio. These
outcomes should reinforce investor confidence in the opportunity offered by
the unpriced option value beyond the Top 10, even for those assets that
ultimately do not deliver a venture style return.
Investment Activity
We have maintained a high bar for new investments and during the period, from
a pipeline of over 740 companies, we reviewed over 240, conducted significant
due diligence on 20 and made one new investment of £2.6 million into LoopFX,
representing a 0.13% conversion rate. LoopFX is an independent venue for large
spot FX trades with a unique matching solution for market participants. LoopFX
enables traders to match, in real-time, with other asset managers and banks
without information leakage and at a mid-market rate, reducing trading costs
and improving best execution processes. Augmentum is the first institutional
investor in LoopFX.
Post period end, in November 2024, the Company announced that it led a US$7
million funding round with a US$4 million investment into UAE-based Pemo. The
company provides an expense management and business payments solution, via
corporate cards, to SME businesses in the UAE, where SMEs spend US$122 billion
annually and where currently only 1.7% of payments are on corporate cards
(source: Mastercard). Headquartered in Dubai, Pemo also has offices in Saudi
Arabia and Egypt, making it well positioned to expand into key high-growth
markets across the Gulf Cooperation Council where corporate card-based
solutions are underdeveloped compared to Europe and where SMEs are expected to
contribute to significant economic growth.
Portfolio Update
Augmentum invested a further £2 million into Tide in May 2024 following
strong growth which saw the company exceed 1 million customers to reach 11%
market share of small business accounts in the UK. With the UK business now
profitable, Tide continues to invest in geographical expansion, launching in
Germany in May 2024 following successful entry into the Indian market in late
2022, where member numbers have now surpassed 400,000. Tide is planning
further launches in Europe over the coming 12 months. Following the successful
acquisition of Funding Options, post-period end, Tide announced its
acquisition of HMRC-recognised payroll solution Onfolk.
Zopa Bank’s exceptional technology and strong balance sheet have continued
to drive profitable growth, building upon the announced full year profit of
£15.8 million in 2023 and now reaching over £300 million in annualised
run-rate revenue. Zopa Bank offers a range of borrowing and savings products
to UK consumers with a market leading Net Promoter Score. It has lent out over
£10 billion and recently surpassed £5 billion in deposits, driven by savings
products such as the Zopa Bank Smart ISA. In May 2024, Zopa Bank entered a
partnership with Octopus Energy to offer financing for solar panel
installations, and in October, post period end, Zopa Bank announced a personal
loan partnership with John Lewis Money, expanding the company’s reach to
more than 23 million John Lewis customers.
Merchants of all sizes are using Volt to accept real-time payments, initiate
payouts and manage funds, across 31 markets globally. In September 2024 Volt
announced a partnership with Farfetch, a leading global marketplace for the
luxury fashion industry with items from more than 50 countries and over 1,400
of the world’s best brands, boutiques, and department stores, enabling
customers to make instant payments directly from their bank accounts.
We have materially reduced our valuation of Grover to reflect the period of
adjustment that the business is currently going through, alongside our and the
Grover board’s desire to see significant operational improvements. The
company remains focused on navigating a path to profitability while it
continues to redefine the way customers consume technology products through
their part payment, part-financing subscription model. The company has
undergone a leadership change, with the promotion of former COO Linda Rubin to
CEO. During the period, Grover announced an additional €50 million of
funding in which Augmentum participated. The company is currently undertaking
a strategic review with a view to establishing a plan that will enable capital
efficiency and profitability going forward.
BullionVault has continued to thrive in this volatile economic environment.
Customer demand for a trusted platform that delivers low-cost access to
vaulted gold and other precious metals shows little sign of slowing down, and
client holdings have reached unprecedented levels of $5.2 billion, helped by
record gold prices. With their financial year closing in October, we expect
another record year of profitability following on from last year’s
impressive numbers. While BullionVault remains a mature position in the
portfolio, we remain a patient holder while we see continued growth in the
bottom line and increased dividends.
XYB, a Coreless Banking platform-as-a-service (“BaaS”) launched by Monese
in May 2023, spun out as a separate business in May 2024. Augmentum invested a
further £1 million into XYB via a secondary transaction in September 2024 and
now owns around 20% of this fast growing business. The strategy is clear
following the separation earlier in the year, with a strong focus on delivery.
The team, led by the seasoned tech leader, Derek Joyce, are currently building
out the organisation and operation with strong commercial traction. During the
period, XYB collaborated with IBM to leverage advanced technology and
consulting expertise for industry solutions, beginning with an operational
resilience proposition for the UK’s largest banks.
Stockholm based Anyfin made significant progress in strengthening its
operational foundation and positioning itself for future growth. Key
milestones include reaching 1 million refinanced loans, reflecting the
company’s expanding customer base and commitment to financial well-being.
Performance has been in line with budget, with Anyfin now approaching
break-even.
Switzerland headquartered AI trading platform Intellis continues to invest in
developing new IP by not only improving their AI driven models in the spot FX
market but are also planning to deploy their neural network into new asset
classes in 2025. Having achieved early profitability, the company is
well-positioned for significant growth in the year ahead.
iwoca announced £270 million of new funding lines from Barclays, Värde
Partners, Citibank, and Insight Investment in May 2024. The company has now
provided £3.5 billion in loans to 100,000 SMEs across the UK and Germany.
iwoca has demonstrated consistent growth and profitability, ranking among the
UK's top ten fintechs alongside Monzo, Starling, and Revolut. 2024 has so far
been a record year for revenues, profit and originations. The company first
achieved net profitability back in Q4 2022 and has since maintained strong
financial performance with an annualised revenue rate of £251 million in Q3
2024, representing 62% year-over-year growth. With £1.5 billion in investment
across equity and debt, iwoca now stands as one of Europe's best funded
fintech success stories and lenders and continues to prove the profit
potential of fintech lending businesses by harnessing machine learning and
digital technologies.
The portfolio has 8% exposure to digital assets, with a strategic focus on
companies providing ‘institutional-grade’ infrastructure to the crypto
market. Following the outcome of the US election post period end, digital
asset prices achieved new highs in anticipation of a more progressive
regulatory regime. Regulatory clarity and renewed confidence in digital asset
markets will provide opportunities for institutional propositions, including
those in our portfolio; Gemini, ParaFi and Tesseract.
Since announcing our investment in Artificial, the company has continued to
highlight its pivotal role in transforming the underwriting landscape. The
London-based insurtech has seen strong adoption of its products, with over
15,000 submissions and £6 billion of premium processed through its contract
builder. By leveraging advanced machine learning and AI, Artificial has
emerged as one of the UK's most promising insurtechs and its inclusion in CB
Insights' 2024 list of the 100 most innovative fintech startups globally
underscores the transformative potential of its AI-driven insurance solutions.
Post period end, Farewill and Monese were acquired (subject to regulatory
approval). Farewill entered into an agreement to be acquired by funeral
provider Dignity. Under the terms of the proposed acquisition, Augmentum will
receive shares in Castelnau Group plc as consideration. The acquisition has
resulted in a downward valuation of the company, although we expect there to
be meaningful future upside from the current mark.
In October 2024 it was also announced that Monese had been acquired by Pockit,
a financial services business for the “unbanked”. Augmentum will hold a
small interest in the new entity, but has written down its interest to £0
while a period of integration and strategic reorientation takes place.
Exits
2024 has been regarded by many as a difficult year for exits, with a limited
number of IPOs in Europe and North America across all tech sectors, and
particularly fintech. As market confidence returns we expect to see a backlog
of scaled fintech companies come to market in 2025 and 2026, and a
corresponding increase in M&A activity. Despite the market conditions, we
announced a further exit during the period from Onfido and FullCircl
post-period end. This takes our realisations since IPO to £99 million, and
our total number of exits to seven. Our portfolio assets carry strategic value
and this includes assets yet to reach scale as well as those which have moved
away from the “venture return” path we seek when initially investing. On
average, our exits have taken place at a valuation uplift of 33% compared to
the latest audited valuation of our positions.
Onfido, the AI-powered digital identity verification business, was acquired by
US payments firm Entrust in April 2024. The transaction valued the Company’s
investment at £10.1 million. The Company initially invested in Onfido in
March 2018 with a £4.0 million investment as part of a US$50 million funding
round, with a further £3.7 million in December 2019. This exit represented a
multiple of 1.3x cost and an IRR of 6%. The resulting IRR is well below our
long-term target and the product of investment terms that were introduced to
the capital structure of the company during a funding round that completed
during the height of the Covid pandemic.
Post-period end we announced the sale of FullCircl. We first invested in what
was then DueDil in 2018, before supporting the business to restructure and
complete a successful merger with Artesian to establish the more substantial
and profitable FullCircl entity. Post period end FullCircl was acquired by
nCino, the NASDAQ listed digital banking platform. The transaction valued the
Company’s investment at £6.1 million subject to final adjustments, which
represents an 80% increase on the valuation of £3.4 million as at 31 March
2024. This return is an example of a modestly valued asset in the tail of the
portfolio that been actively managed to maximise the return.
Performance
As at 30 September 2024, our NAV per share after performance fee stands at
164.3p (31 March 2024: 167.4p). Since IPO the Company has generated a Gross
IRR (before expenses) on capital deployed of 14%.
Each position is valued objectively using the most appropriate methodology and
87% of the portfolio is valued using public market comparables. Robust
governance is integral to the process, with all valuations signed off by the
Board and Valuations Committee.
As outlined in previous reports, downside protections, such as liquidation
preference and anti-dilution provisions, are integral structures in our
typical venture investments. These terms protect the value of Augmentum’s
position in the event of a reduction in the equity value of a company.
Our seven exits to date demonstrate external validation of our valuations
approach. All of these were realised at or above our last reported valuation.
Outlook
We often reference the ecosystem flywheel dynamic when explaining our
confidence in the future of European fintech. This phenomenon of talent
recycling, funding availability, and supportive policy environment is
increasingly reflected in company formations statistics and a recent report
coined the term ‘founder factories’ to describe the role of scaled
fintechs in supporting the next generation of firms (source: Accel/Dealroom).
It found that alumni from the 98 venture-backed European fintech companies
with valuations above $1 billion have gone on to establish 625 new companies,
of which more than a third are also fintechs. As new companies emerge, our
relationships across the ecosystem and reputation as a leading investor in
fintech leave us optimally positioned to invest in outstanding founders
and ventures.
European fintech activity is concentrated within a number of key hubs, led by
London, and supported by Berlin, Paris and Stockholm. Local flywheels support
activity within each, with 61% of companies emerging from successful fintechs
founded in the same city as the original company (source: Accel/Dealroom). We
continue to build our presence in these locations whilst also proactively
expanding our footprint to new hubs, taking advantage of our multi-geography
strategy to seek the best opportunities. New hubs can emerge following a major
local success, or when an experienced team brings an established idea to the
greenspace of a new market or region. When a flywheel is newly established,
they will often deliver periods of exceptional ‘catch-up’ growth, which we
believe we are now seeing in the CEE and notably the GCC, where we have
announced our first investment in Pemo.
The UK retains the title of Europe’s leading market for fintech, with 9% of
total global fintech investment in 2024 year-to-date (source: FT Partners),
but does face increasing competition from other hubs. Policy makers must
continue to take a long-term view to protect the powerful flywheel that has
been generated by UK fintech over the last 20 years. Attracting and retaining
top founders and their growing teams, and ensuring that growth capital is
available to support them through late stages and public listing should be
seen as priorities by the new Labour government. Timely delivery of
initiatives, such as the Mansion House Compact, designed to unlock pension
fund capital to address demand issues in domestic markets and support retail
investor returns must continue to be pursued. European and UK fintechs, and
their backers, are ready to play their part in achieving UK economic growth,
but the clock is ticking. The timely and successful deployment of pension
capital is key if the Chancellor wants to achieve her ambitious growth agenda,
which we applaud.
Along with the flywheel dynamic, emerging technologies, led by AI, further
expand the opportunity set in fintech. Along with generalised operational
productivity improvements, AI creates opportunities for novel products and
operating models in financial services. The power of this technology is in its
breadth of applications, and this is why we have the confidence to call it a
paradigm shift for fintech and financial services. Across businesses from all
sectors, the adoption of AI in at least one business function has already
surpassed 70% (source: McKinsey) and bold investment is being rewarded, with
‘AI leaders’ – i.e. those placing AI at the centre of their technology
strategy - the first to be recognising real returns on investments (source:
BCG).
As we have seen before with innovations such as digital banking and digital
identity verification, it is technology-forward fintech firms who are best
positioned to bring emerging technologies to market, both in competition with
incumbent financial services firms and as their technology partners. Digital
capabilities are a top priority of every incumbent financial services firm and
close collaboration with fintech firms - through buy, build and partnership
strategies - has become a competitive imperative. Fintech’s market share of
financial services remains just 3% but, with growth at close to four times the
rate of incumbent financial services firms, the sector continues to make
inroads into huge addressable headroom (source: BCG). Fintech’s market share
is projected to more than double in the next decade, positioning Augmentum as
a distinctive gateway for investors to capitalise on this growth.
Our own operations are increasingly technology and data driven, having
continuously developed our proprietary deal origination engine “ADA’ over
the last six years. ADA leverages technology and data to drive competitive
advantage at every stage of the origination and investment process. This
includes AI automations connecting internal and external data streams with our
unrivalled fintech network which now extends to more than 8,000 organisations.
ADA also integrates learnings from the combined 75 years of fintech
investment experience in our investment committee to deliver a streamlined due
diligence process without compromising on quality; our bar for progression
from pipeline to investment remains just 0.1%. We have already seen
quantifiable benefits in the breadth, depth and clarity of our investment
activity with ADA and this technology-driven approach was instrumental in
securing our three latest investments in Artificial, LoopFX and Pemo.
Building on multiple generations of start-up success, and bolstered by new
technologies such as AI, the investment opportunity in European fintech
remains highly compelling. Since IPO, we have built a diversified portfolio
which has consistently delivered growth despite the challenging market
conditions of the last two years. Building on our seven exits to date, the
portfolio is positioned to deliver realisations in the years ahead. Outside of
its mature positions the portfolio contains value that is unpriced by the
market today, with earlier-stage companies having the potential to scale or to
realise their strategic value at earlier stages. As our sector has developed
so too has our multinational team and today we combine our established
reputation as a leading fintech investor with an increasingly technology
driven approach. We believe this is the best strategy to continue to deliver
access to a strong and diversified portfolio of private fintech companies
which can deliver exceptional returns.
Tim Levene
CEO
Augmentum Fintech Management Limited
25 November 2024
.
Investments
Tide
Tide’s (www.tide.co) mission is to help small and mid-sized businesses
(“SMEs”) save time and money in the running of their businesses. Customers
can be set up with an account number and sort code in less than 10 minutes,
and the company is building a comprehensive suite of digital banking services
for businesses, including automated accounting, instant access to credit, card
control, instant card freezing and quick, mobile invoicing. Tide has continued
to expand its product offering with the launch of Tide Accounting and Tide
Acquiring in 2023 and also completed its acquisition of Funding Options in
2023, a leading UK marketplace for SMEs seeking business finance Post period
end, in October 2024, Tide announced their acquisition of HMRC-recognised
payroll solution Onfolk. Tide is also expanding geographically. Tide launched
in India in December 2022 and also in Germany in May 2024. Tide has 11% market
share of small business accounts in the UK, where it has more than 650,000
customers, and more than 350,000 customers in India.
Augmentum led Tide’s £44.1 million first round of Series B funding in
September 2019, alongside Japanese investment firm The SBI Group. In July 2021
Tide completed an £80 million Series C funding round led by Apax Digital, in
which Augmentum invested an additional £2.2 million and into which the £2.5
million loan note converted. Augmentum invested a further £4.2 million in
October 2023 and £2.0 million in May 2024 through a combination of primary
and secondary transactions.
Source: Tide
30 Sept 31 March
2024 2024
£’000 £’000
Cost 19,376 17,376
Value 59,715 51,293
Valuation Methodology^ Rev. Multiple Rev. Multiple
As per last filed audited accounts of the investee company for the year to 31
December 2023:
2023 2022
£’000 £’000
Turnover 119,351 59,176
Pre tax loss (43,714) (39,795)
Net assets 19,372 32,444
Zopa
Having been founded in 2005 as the world’s first peer-to peer (“P2P”)
lending company, Zopa (www.zopa.com) launched Zopa Bank following a funding
round in 2020. It was granted a full UK banking licence, allowing it to offer
a wider product range to its customers. After 17 years of delivering positive
returns for investors, Zopa closed the P2P lending side of its business in
2021 to fully focus on Zopa Bank.
Current products include fixed term and smart savings, wedding and home
improvement loans, debt consolidation loans, a credit card and motor finance.
Zopa Bank is regulated by both the PRA and the FCA.
Zopa Bank has continued to drive profitable growth, with over £300 million in
annualised run-rate revenue. The company has lent over £10 billion and
recently surpassed £5 billion in deposits. Zopa Bank is a multiple awards
winner. In 2024, the company won three more awards from MoneyNet; Best Savings
App, Best Fixed Rate Cash ISA Provider and Personal Savings Provider of the
Year. These follow a string of previous awards, including being named the
British Bank Awards’ Best Personal Loan Provider for the sixth year in a row
in 2023. 2023 marked a key milestone, with Zopa achieving its first full year
of profitability.
Augmentum participated in a £20 million funding round led by Silverstripe in
March 2021, in October 2021 participated with a further £10 million
investment in a £220 million round led by SoftBank, and in February 2023
invested a further £4 million as part of a £75 million equity funding round
alongside other existing investors. In September 2023 Zopa Bank raised £75
million in Tier 2 Capital to support further scaling.
Source: Zopa Bank
30 Sept 31 March
2024 2024
£’000 £’000
Cost 33,670 33,670
Value 39,346 39,291
Valuation Methodology Rev. Multiple Rev. Multiple
As per last filed audited accounts of the investee company for the year to 31
December 2023:
2023 2022
£’000 £’000
Operating income 223,544 153,737
Pre tax profi/(loss) 10,828 (23,783)
Net assets 413,174 299,674
Volt
Volt (www.volt.io) is a provider of account-to-account payments connectivity
for international merchants and payment service providers (PSPs). An
application of Open Banking, account-to-account payments – where funds are
moved directly from one bank account to another rather than via payment rails
– delivering benefits to both consumers and merchants. This helps merchants
shorten their cash cycle, increase conversion and lower their costs. Volt
offers coverage in 31 markets and counting, including UK, Europe, Brazil and
Australia. In June 2023 Volt announced their partnership with Worldpay and
Shopify. In February 2024, Volt was granted a UK EMI licence by the FCA,
enabling Volt to evolve its cash management product 'Connect’ for virtual
accounts. In September 2024 Volt announced a partnership with Farfetch, a
leading global marketplace for the luxury fashion industry with items from
more than 50 countries and over 1,400 of the world’s best brands, boutiques,
and department stores.
Augmentum invested £0.5 million in Volt in December 2020, £4 million in its
June 2021 US$23.5 million Series A funding round and £5.3 million in its
US$60 million Series B funding round in June 2023.
Source: Volt
30 Sept 31 March
2024 2024
£’000 £’000
Cost 9,800 9,800
Value 25,294 25,459
Valuation Methodology Rev. Multiple Rev. Multiple
Volt is not required to publicly file audited accounts.
Grover
Berlin-based Grover (www.grover.com) is the leading consumer-tech subscription
platform, bringing the access economy to the consumer electronics market by
offering a simple, monthly subscription model for technology products. Private
and business customers have access to over 8,000 products including
smartphones, laptops, virtual reality technology, wearables and smart home
appliances. The Grover service allows users to keep, switch, buy, or return
products depending on their individual needs. Rentals are available in
Germany, Austria, the Netherlands and Spain. Grover is at the forefront of the
circular economy, with products being returned, refurbished and recirculated
until the end of their usable life. Grover has circulated over 1.2 million
devices.
In September 2019 Augmentum led a €11 million funding round with a
€6 million convertible loan note (“CLN”) investment. This coincided
with Grover signing a €30 million debt facility with Varengold Bank, one of
Germany’s major fintech banking partners. In March 2021 Grover completed a
€60 million Series B equity and debt funding round, with Augmentum
participating and converting its CLN, and Grover’s Series C funding round in
April 2022 raised US$330 million in equity and debt funding. In September 2023
Augmentum invested £1.4 million as part of a €23 million transaction and in
July 2024 contributed €1.8 million to €50 million of bridge financing.
Source: Grover
30 Sept 31 March
2024 2024
£’000 £’000
Cost 10,813 9,295
Value 19,627 35,893
Valuation Methodology Rev. Multiple Rev. Multiple
As an unquoted German company, Grover is not required to publicly file audited
accounts.
BullionVault
BullionVault (www.bullionvault.co.uk) is a physical gold and silver market for
private investors online. It enables people across 175 countries to buy and
sell professional-grade bullion at competitive prices online, with
£5.2 billion of assets under administration, over £75 million worth of gold
and silver traded monthly, and over 100,000 clients.
Each user’s property is stored in secure, specialist vaults in London, New
York, Toronto, Singapore and Zurich. BullionVault’s unique daily audit then
proves the full allocation of client property every day.
The company generates monthly profits from trading, commission and interest.
It is cash generative, dividend paying, and well-placed for any cracks in the
wider financial markets.
Source: BullionVault
30 Sept 31 March
2024 2024
£’000 £’000
Cost 8,424 8,424
Value 14,924 13,119
Valuation Methodology Earnings Multiple Earnings Multiple
Dividends paid - 799
As per last filed audited accounts of the investee company for the year to 31
October 2023:
2023 2022
£’000 £’000
Gross profit 13,311 13,071
Pre tax profit 13,023 8,364
Net assets 46,323 41,294
XYB
XYB (www.xyb.co) is a banking-as-a-service (“BaaS”) platform that was
launched by Monese in May 2023 and spun out as a separate business in May
2024. XYB enables financial institutions to build digital products using
technology developed by Monese and counts HSBC and Investec amongst its client
base. The BaaS market shows strong growth as established banks and fintech
companies continue to bring innovative digital products to market.
Augmentum invested £1 million specifically into the spun-out business via a
secondary transaction in September 2024.
Source: XYB
30 Sept 31 March
2024 2024
£’000 £’000
Cost 14,967 n/a
Value 14,629 n/a
Valuation Methodology Rev. Multiple n/a
XYB is a new company and no accounts have been filed.
Anyfin
Anyfin (www.anyfin.com) was founded in 2017 by former executives of Klarna,
Spotify and iZettle, and leverages technology to allow creditworthy consumers
the opportunity to improve their financial wellbeing by consolidating and
refinancing existing credit agreements with improved interest rates, as well
as offering smart budgeting tools. Anyfin is currently available in Sweden,
Finland, Norway and Germany, with plans to expand across Europe as well as
strengthen its product suite in existing markets, and over 1 million people
have downloaded the app. In July, Anyfin announced UC-kollen, a new service in
the Anyfin app providing daily credit rating updates and tips to improve
scores.
Augmentum invested £7.2 million in Anyfin in September 2021 as part of a
US$52 million funding round, a further £2.7 million as part of a
US$30 million funding round in November 2022 and £0.8 million in July 2024.
Source: Anyfin
30 Sept 31 March
2024 2024
£’000 £’000
Cost 10,768 9,924
Value 11,066 9,416
Valuation Methodology Rev. Multiple Rev. Multiple
As an unquoted Swedish company, Anyfin is not required to publicly file
audited accounts.
Intellis
Intellis, based in Switzerland, is an algorithmic powered quantitative hedge
fund operating in the FX space. Intellis’ proprietary approach takes a
conviction based assessment towards trading in the FX markets, a position
which is uncorrelated to traditional news driven trading firms. They operate
across a range of trading venues with a regulated Investment Trust fund
structure that enables seamless onboarding of new Liquidity Partners.
Following an initial investment of €1 million In 2019, Augmentum exercised
its option to invest a further €1 million in March 2020 and a further €1
million in March 2021.
Source: Intellis
30 Sept 31 March
2024 2024
£’000 £’000
Cost 2,696 2,696
Value 10,013 10,074
Valuation Methodology P/E Multiple P/E Multiple
As an unquoted Swiss company, Intellis is not required to publicly file
audited accounts.
Iwoca
Founded in 2011, iwoca (www.iwoca.co.uk) uses award-winning technology to
disrupt small business lending across Europe. They offer short-term
‘flexi-loans’ of up to £500,000 to SMEs across the UK and Germany. iwoca
leverages online integrations with high-street banks, payment processors and
sector-specific providers to look at thousands of data points for each
business. These feed into a risk engine that enables the company to make a
fair assessment of any business and approve a credit facility within hours. In
addition to its flexi-loans, Iwoca launched iwocaPay in June 2020, an
innovative business-to-business (B2B) ‘buy now pay later’ product to
provide flexible payment terms to buyers while giving peace of mind to sellers
and also launched a revenue-based loan with eBay in 2022 where repayments
are a percentage of a business’s monthly sales. The company has lent over
£3.5 billion in the UK and Germany since its launch across more than 130,000
business loans.
Augmentum originally invested £7.5 million in Iwoca in 2018 and has since
added £0.35 million. Iwoca has raised over £1 billion in debt funding from
partners including Barclays, Pollen Street Capital, Värde Citibank and
Insight Investment.
Source: Iwoca
30 Sept 31 March
2024 2024
£’000 £’000
Cost 7,852 7,852
Value 9,616 7,926
Valuation Methodology Earnings Multiple* Earnings Multiple
As per last filed audited accounts of the investee company for the year to 31
December 2023:
2023 2022
£’000 £’000
Turnover 142,584 78,260
Pre tax profit/(loss) 21,784 (11,177)
Net assets 54,976 28,224
Gemini
Gemini (www.gemini.com) enables individuals and institutions to safely and
securely buy, sell and store cryptocurrencies. Gemini was founded in 2014 by
Cameron and Tyler Winklevoss and has been built with a security and regulation
first approach. Gemini operates as a New York trust company regulated by the
New York State Department of Financial Services (NYSDFS) and was the first
cryptocurrency exchange and custodian to secure SOC 1 Type 2 and SOC 2 Type 2
certification. Gemini entered the UK market in 2020 with an FCA Electronic
Money Institution licence, becoming one of only ten companies to have achieved
FCA Cryptoasset Firm Registration at that time.
Gemini announced acquisitions of portfolio management services company BITRIA
and trading platform Omniex in January 2022. Gemini expanded into the UAE and
Asia in 2023, and in 2024 was selected as custodian for Path Crypto’s
Managed Portfolios, the first and only bitcoin ETF in Australia launched by
Monochrome Asset Management, and a landmark ether staking ETF fund launched by
Purpose Investments.
Augmentum participated in Gemini’s first ever funding round in November 2021
with an investment of £10.2 million.
Source: Gemini
30 Sept 31 March
2024 2024
£’000 £’000
Cost 10,150 10,150
Value 9,292 8,306
Valuation Methodology Rev. Multiple Rev. Multiple
Gemini is not required to publicly file audited accounts.
FullCircl
FullCircl (www.fullcircl.com) was formed from the combination of Artesian and
Duedil. Artesian was founded with a goal to change the way B2B sellers
communicate with their customers. They built a powerful sales intelligence
service using the latest in Artificial Intelligence and Natural Language
Processing to automate many of the time consuming, repetitive tasks that cause
the most pain for commercial people.
In August 2023 FullCircl announced the acquisition of W2 Global Data
Solutions, a provider of real-time digital solutions for global regulatory
compliance. The acquisition strengthens FullCircl’s compliance suite and
accelerates the company’s ambition to become the market leader in smart
customer onboarding solutions for regulated businesses. The combined company
now provides coverage on entities located in 160 countries.
Augmentum originally invested in DueDil, which merged with Artesian in July
2021. Combining DueDil’s Business Information Graph (B.I.G.)™ and Premium
APIs, and Artesian’s powerful web application and advanced rules engine
delivers an easy to deploy solution for banks, insurers and FinTechs to
engage, onboard and grow the right business customers. Post period end, in
October 2024, nCino, the NASDAQ listed US digital banking platform, agreed to
acquire FullCircl.
Artificial
Artificial (www.artificial.io) is an established underwriting technology
provider for the London Insurance Market. This London-based insurtech partners
with global insurers and brokers to facilitate algorithmic placement of
commercial and specialty risk, backed by their powerful contract builder and
underwriting platform.
Augmentum led Artificial’s £8 million Series A+ round in January 2024 with
a £4 million investment, alongside existing investors MS&AD Ventures and
FOMCAP IV. The round was aimed at allowing Artificial to accelerate their
growth, to continue to build out its product range and further consolidate its
position as a leader in algorithmic underwriting software as the insurance
market migrates towards digital solutions. In July 2024 Augmentum added to
its investment with a £0.8 million secondary share purchase.
Wematch
Wematch (www.wematch.live) is a capital markets trading platform that helps
financial institutions transition liquidity to an orderly electronic service,
improving productivity and de-risking the process of voice broking. Their
solution helps traders find liquidity, negotiate, trade, optimise and manage
the lifecycle of their portfolios of assets and trade structures. Wematch is
focused on structured products such as securities financing, OTC equity
derivatives and OTC cleared interest rates derivatives.
Created in 2017, Wematch is headquartered in Tel Aviv and has offices in
London and Paris. In March 2023 it announced a collaboration with MTS Markets,
owned by Euronext, creating MTS Swaps by Wematch.live, which aims to bridge
the gap between legacy voice trading and pure electronic trading in the
interdealer IRS market. In August 2023 Wematch passed a milestone of US$200
billion in ongoing notional value of trades on their platform and also reached
an average daily matched volume (ADMV) of US$11 billion in Europe, the Middle
East, and Africa.
Augmentum invested £3.7 million in September 2021 and £0.4 million in August
2024.
Wayhome
Wayhome (www.wayhome.co.uk) offers a unique part-own part-rent model of home
ownership, requiring as little as 5% deposit with customers paying a market
rent on the portion of the home that Wayhome owns, with the ability to
increase the equity in the property as their financial circumstances allow. It
launched to the public in September 2021, following closure of the initial
phase of a £500 million pension fund investment. The first fund has now
closed having helped over 650 people buy a new home. Wayhome are currently
working on their second fund.
Wayhome opens up owner-occupied residential property as an asset class for
pension funds, who will earn inflation-linked rent on the portion not owned by
the occupier.
Augmentum invested £2.5 million in 2019, £1 million in 2021, a further £0.9
million in the Company's financial year to 31 March 2023 and £0.3 million in
July 2024.
Tesseract
Tesseract (www.tesseractinvestment.com) is a forerunner in the dynamic digital
asset sector, providing digital lending solutions to market makers and other
institutional market participants via regulated custody and exchange
platforms. Tesseract was founded in 2017, is regulated by the Finnish
Financial Supervisory Authority (“FIN-FSA”), and was one of the first
companies in the EU to obtain a 5AMLD (Fifth Anti-Money Laundering Directive)
virtual asset service provider (“VASP”) licence. It is the only VASP with
an express authorisation from the FIN-FSA to deploy client assets into
decentralized finance or “DeFi”.
Tesseract provides an enabling crypto infrastructure to connect digital asset
lenders with digital asset borrowers. This brings enhanced capital efficiency
with commensurate cost reduction to trading, in a space that is currently
significantly under-leveraged relative to traditional capital markets.
Augmentum led Tesseract’s Series A funding round in June 2021 with an
investment of £7.3 million.
Kipp
Kipp (www.letskipp.com) is an Israeli fintech that has developed an AI
platform that transforms the traditional payment model to increase credit card
transaction approvals, revenue, and customer satisfaction. Its core solution
relies heavily on data enrichment and risk management to help merchants and
banks split the cost of risk to incentivise issuing banks to approve more
transactions.
Augmentum invested £4 million in May 2022.
Baobab
Berlin based Baobab (www.baobab.io) is a pioneer in the provision of European
cyber insurance for SMEs. With capacity provision from Zurich, Baobab uses a
novel approach to underwriting, pricing and risk mitigation, and works with
leading SME cyber security providers to prevent breaches for its insured
customers.
Augmentum invested £2.6 million in January 2023 and £0.6 million in July
2024.
ParaFi Capital
ParaFi Capital (www.parafi.com) is an investor in decentralised finance
protocols that address tangible use cases of the technology and demonstrate
signs of product-market fit. ParaFi investment has drawn on their domain
expertise developed in both traditional finance and crypto to identify and
invest in leading protocols such as Compound (lending and interest accrual),
Aave (asset borrowing), Uniswap (automated liquidity provision), Synthetix
(synthetic asset trading) and MakerDAO (stablecoins). ParaFi also supports its
protocols as a liquidity provider and governance participant.
Augmentum invested £2.8 million in ParaFi in January 2021. Co-investors
include Bain Capital Ventures and Galaxy Digital.
LoopFX
LoopFX (www.theloopfx.com) is an independent venue for large spot FX trades
with a unique matching solution for market participants. LoopFX enables
traders to match, in real-time, with other asset managers and banks without
information leakage and at a mid-market rate, reducing trading costs and
improving best execution processes. LoopFX’s ‘Peer-To-Bank’ matching
technology has been integrated into leading forex platforms - State Street’s
FX Connect and FactSet’s Portware.
Augmentum invested £2.6 million in June 2024.
Sfermion
Sfermion (www.sfermion.io) is an investment fund focused on the non-fungible
token (NFT) ecosystem. Their goal is to accelerate the emergence of the open
metaverse by investing in the founders, companies, and entities creating the
infrastructure and environments forming the foundations of our digital future.
Augmentum committed US$3 million in October 2021, to be drawn down in
tranches.
Epsor
Epsor (www.epsor.fr) is a Paris based provider of employee and retirement
savings plans delivered through an open ecosystem, giving access to a broad
range of asset management products accessible through its intuitive digital
platform. Epsor serves over 1,200 clients including Santander, Louis Vuitton
and Sotheby’s, and their 150,000+ employees..
Augmentum invested £2.2 million in Epsor in June 2021.
Farewill
In the next 10 years, £1 trillion of inheritance will pass between
generations in the UK. Farewill (www.farewill.com) is a digital, all-in-one
financial and legal services platform for dealing with death and after-death
services, including wills, probate and cremation, augmented with funeral plans
in 2024. Farewill has won numerous awards, including being named Wills &
Probate Firm of the Year 2024 and winning the UK Enterprise Customer Care
Excellence Award 2024. The organisation has also been rated excellent on
Trustpilot, scoring an average customer approval rating of 4.9/5 from over
17,000 reviews. It is now the largest will writer in the UK.
Since its launch in 2015 Farewill’s customers have pledged over £1.03
billion to charities through their wills.
Augmentum led Farewill’s £7.5 million Series A fundraise in January 2019,
with a £4 million investment, participated in its £20 million Series B, led
by Highland Europe in July 2020, with £2.6 million, and in its further
£4.8 million fundraise in March 2023, with £0.8 million. The proposed
acquisition of Farewill by Dignity (in which Castelnau Group plc has a
controlling stake) was also announced in October, through which Augmentum will
receive shares in Castelnau Group plc as consideration for the transaction.
WhiskyInvestDirect
Founded in 2015, WhiskyInvestDirect (www.whiskyinvestdirect.com), was a
subsidiary of BullionVault and is the online market for buying and selling
Scotch whisky as it matures in barrel. This is an asset class that has a long
track record of growth, yet has previously been opaque and inaccessible.
The business seeks to change the way some of the three billion litres of
maturing Scottish whisky is owned, stored and financed, giving self-directed
investors an opportunity to profit from whisky ownership, with the ability to
trade 24/7. At its October 2022 financial year end the company's clients held
12 million LPA (Litres of Pure Alcohol) of spirit.
Augmentum’s holding derives from WhiskeyInvestDirect being spun out of
BullionVault in 2020.
Previse
Previse (www.previ.se) allows suppliers to be paid instantly. Previse’s
artificial intelligence (“AI”) analyses the data from the invoices that
sellers send to their large corporate customers. Predictive analytics identify
the few problematic invoices, enabling the rest to be paid instantly. Previse
charges the suppliers a small fee for the convenience, and shares the profit
with the corporate buyer and the funder. Previse precisely quantifies dilution
risk so that funders can underwrite pre-approval payables at scale. In January
2022 Mastercard unveiled that its next-generation virtual card solution for
instant B2B payments would use Previse’s machine learning capabilities. The
solution combines Previse’s machine learning, with Mastercard’s core
commercial solutions and global payment network, to transform how businesses
send and receive payments.
Augmentum invested £250,000 in a convertible loan note in August 2019. This
converted into equity as part of the company’s US$11 million funding round
in March 2020, alongside Reefknot Investments and Mastercard, as well as
existing investors Bessemer Venture Partners and Hambro Perks. Previse was
awarded a £2.5 million Banking Competition Remedies’ Capability and
Innovation Fund grant in August 2020. In May 2022 Previse closed the first
phase of its series B financing round, which was led by Tencent, with US$18
million raised, including £2 million from Augmentum.
Habito
Habito (www.habito.com) is transforming the United Kingdom’s £1.3 trillion
mortgage market by taking the stress, arduous paperwork, hidden costs and
confusing process out of financing a home. Since launching in April 2016,
Habito had brokered £7 billion of mortgages by July 2021. Habito launched its
own buy-to-let mortgages in July 2019 and in March 2021 launched a 40-year
fixed-rate mortgage ‘Habito One’, the UK’s longest-ever fixed rate
mortgage.
In August 2019, Augmentum led Habito’s £35 million Series C funding round
with a £5 million investment and added £1.3 million in the Company's
financial year ended 31 March 2023.
.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2024
Six months ended Six months ended
30 September 2024 30 September 2023
Notes Revenue Capital Total Revenue Capital Total
return return £’000 return£’000 return £’000
£’000 £’000 £’000
Gains on investments held at fair value - (4,295) (4,295) - 2,952 2,952
Investment income 894 - 894 702 - 702
AIFM and Performance Fees 2 (303) - (303) (292) - (292)
Other expenses (2,630) (138) (2,768) (2,453) (16) (2,469)
(Loss)/return before taxation (2,039) (4,433) (6,472) (2,043) 2,936 893
Taxation - - - - - -
(Loss)/return attributable to equity shareholders of the parent company (2,039) (4,433) (6,472) (2,043) 2,936 893
(Loss)/return per share (pence) 3 (1.2) (2.6) (3.8) (1.2) 1.7 0.5
The total column of this statement represents the Group’s Consolidated
Income Statement, prepared in accordance with IFRS as adopted by the UK.
The revenue return and capital return columns are supplementary to this and
are prepared under guidance published by the Association of Investment
Companies.
The Group does not have any other comprehensive income and hence the total
return, as disclosed above, is the same as the Group’s total comprehensive
income.
All items in the above statement derive from continuing operations.
All returns are attributable to the equity holders of Augmentum Fintech plc,
the parent company. There are no non-controlling interests.
.
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 September 2024
Six months ended 30 September 2024
Group Ordinary Share Special Other Revenue Total
share premium reserve capital reserve £’000
capital account £’000 reserve £’000
£’000 £’000 £’000
Opening shareholders’ funds 1,810 105,383 80,609 135,293 (19,778) 303,317
Purchase of own shares into treasury - - (2,210) - - (2,210)
(Loss)/return for the period - - - (4,433) (2,039) (6,472)
At 30 September 2024 1,810 105,383 78,399 130,860 (21,817) 294,635
Six months ended 30 September 2023
Group Ordinary Share Special Other Revenue Total
share premium reserve capital reserve £’000
capital account £’000 reserve £’000
£’000 £’000 £’000
Opening shareholders’ funds 1,810 105,383 85,218 117,740 (16,027) 294,124
Purchase of own shares into treasury - - (3,888) - - (3,888)
Return/(loss) for the period - - - 2,936 (2,043) 893
At 30 September 2023 1,810 105,383 81,330 120,676 (18,070) 291,129
.
Condensed Consolidated and Company Statement of Financial Position
as at 30 September 2024
Note 30 September 31 March
2024 2024
£’000 £’000
Non current assets
Investments held at fair value 7 263,448 265,083
Property, plant & equipment 187 219
Current assets
Right of use asset 363 438
Other receivables 166 245
Cash and cash equivalents 31,775 38,505
Total assets 295,939 304,490
Current liabilities
Other payables (936) (699)
Lease liability (368) (474)
Total assets less current liabilities 294,635 303,317
Net assets 294,635 303,317
Capital and reserves
Called up share capital 4 1,810 1,810
Share premium account 4 105,383 105,383
Special reserve 78,399 80,609
Retained earnings:
Capital reserves 130,860 135,293
Revenue reserve (21,817) (19,778)
Total equity 294,635 303,317
NAV per share (pence) 5 175.6 178.6
NAV per share after performance fee (pence) 5 164.3 167.4
.
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 September 2024
Six months Six months
ended ended
30 September 30 September
2024 2023
£’000 £’000
Cash flows from operating activities
Purchases of investments (12,590) (5,511)
Sales of investments 9,930 22,790
Acquisition of property, plant and equipment (7) (4)
Interest received 945 680
Operating expenses paid (2,681) (1,769)
Net cash (outflow)/inflow from operating activities (4,403) 16,186
Cash flow from financing activities
Purchase of own shares into Treasury (2,327) (4,429)
Net cash (outflow) from financing (2,327) (4,429)
(Decrease)/increase in cash and cash equivalents (6,730) 11,757
Cash and cash equivalents at the beginning of the period 38,505 40,015
Cash and cash equivalents at the end of the period 31,775 51,772
.
Notes to the Financial Statements
For the six months ended 30 September 2024
1.a General information
Augmentum Fintech plc is a company limited by shares, incorporated and
domiciled in the UK. Its registered office is 25 Southampton Buildings,
London WC2A 1AL, UK and its principal place of business is at 4 Chiswell
Street, London EC1Y 4UP. Its shares are listed on the London Stock Exchange.
These condensed interim financial statements were approved for issue on 25
November 2024. These condensed interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 March 2024 were approved by
the board of directors on 24 June 2024 and delivered to the Registrar of
Companies.
The report of the auditors on those accounts was unqualified, did not contain
an emphasis of matter paragraph and did not contain any statement under
section 498 of the Companies Act 2006.
The financial statements have been reviewed, not audited.
1.b Basis of preparation
This condensed consolidated interim financial report for the half-year
reporting period ended 30 September 2024 has been prepared in accordance with
the Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority and International Accounting Standard IAS 34, ‘Interim Financial
Reporting’, as adopted in the UK.
The accounting policies adopted are consistent with those of the previous
financial year and corresponding interim reporting period, except for the
adoption of new and amended standards as set out below.
1.c New and amended standards adopted by the Group
No new or amended standards became applicable for the current reporting period
that have an impact on the Group or Company.
1.d Going Concern
The Directors believe that it is appropriate to adopt the going concern basis
in preparing these condensed consolidated financial statements, as the Board
considers the Group has sufficient financial resources to continue in
operation for at least the next 12 months from the date of signing of these
financial statements.
1.e Segmental Analysis
The Group operates a single business segment for reporting purposes and is
managed as a single investment company. Reporting is provided to the Board of
Directors on an aggregated basis. The investments are all located in the UK,
continental Europe, the Middle East and the US.
1.f Related Party Transactions
There have been no changes to the nature of the related party arrangements or
transactions during the period to those reported in the Annual Report for the
year ended 31 March 2024.
1.g Events after the reporting period
There have been no significant events since the end of the reporting period
requiring disclosure.
2 AIFM and Performance Fees
Revenue Capital Six months Revenue Capital Six months
£’000 £’000 ended £’000 £’000 ended
30 September 30 September
2024 2023
£’000 £’000
AIFM fees 303 - 303 292 - 292
Performance fee - - - - - -
303 - 303 292 - 292
A performance fee is payable by the Company to AFML when the Company has
realised an aggregate annualised 10% return on investments (the ‘hurdle’)
in each basket of investments. Based on the investment valuations and the
hurdle level as at 30 September 2024 the hurdle has been met, on an unrealised
basis, and as such a performance fee of £19,000,000 has been accrued by the
Company, equivalent to 9.9 pence per share (31 March 2024: 18,980,000; 11.2
pence per share). This accrual is reversed on consolidation and not included
in the Group Statement of Financial Position.
The performance fee is only payable to AFML if the hurdle is met on a realised
basis. See page 25 and Note 19.9 of the 2024 Annual Report for further
details. Any allocation of the performance fee by AFML to its employees is
made on a discretionary basis.
3 (Loss)/return per share
The (loss)/return per share figures are based on the following figures:
Six months Six months
ended ended
30 September 30 September
2024 2023
£’000 £’000
Net revenue loss (2,039) (2,043)
Net capital return 4,433 2,936
Net total (loss)/return (6,472) 893
Weighted average number of ordinary shares in issue 169,352,855 171,507,993
Pence Pence
Revenue loss per share (1.2) (1.2)
Capital (loss)/return per share (2.6) 1.7
Total (loss)/return per share (3.8) (0.5)
4 Share capital
As at 30 September 2024 there were 167,754,471 (31 March 2024: 169,831,285)
ordinary shares in issue, excluding shares held in treasury, and 13,258,596
(31 March 2024: 11,182,412) shares held in treasury.
During the year to 31 March 2024 4,687,567 shares were bought back into
treasury at an average price of 98.3p per share.
From 1 April 2024 to 30 September 2024 2,076,814 of the Company’s ordinary
shares were bought back into treasury at an average price of 105.8p per share.
No shares were issued during the six months.
5 Net asset value (“NAV”) per share
The NAV per share is based on the Group net assets attributable to the equity
shareholders of £294,635,000 (31 March 2024: £303,317,000) and 167,754,471
(31 March 2024: 169,831,285) shares being the number of shares in issue at the
period end.
The NAV per share after performance fee* is based on the Group net assets
attributable to the equity shareholders, less the performance fee accrual made
by the Company of £19,000,000 (31 March 2024: £18,980,000), and the number
of shares in issue at the period end.
* Alternative Performance Measure
6 Subsidiary undertakings
The Company has an investment in the issued ordinary share capital of its
wholly owned subsidiary undertaking, Augmentum Fintech Management Limited,
which is registered in England and Wales, operates in the United Kingdom and
is regulated by the Financial Conduct Authority.
7 Financial Instruments
The principal risks the Company faces from its financial instruments are:
• Market Price Risk
• Liquidity Risk; and
• Credit Risk
Market Price Risk
Market price risk arises mainly from uncertainty about future prices of
financial instruments in the Group’s portfolio. It represents the potential
loss the Group might suffer through holding market positions in the face of
price movements, mitigated by stock diversification.
The Group is exposed to the risk of the change in value of its unlisted equity
and non-equity investments. For unlisted equity and non-equity investments the
market risk is principally deemed to be represented by the assumptions used in
the valuation methodology as set out in the accounting policy.
Liquidity Risk
The Group’s assets comprise unlisted equity and non-equity investments.
Whilst unlisted equity is illiquid, short-term flexibility is achieved through
cash and cash equivalents.
Credit Risk
The Group’s exposure to credit risk principally arises from cash and cash
equivalents. Only highly rated banks (with credit ratings above A3, based on
Moodys ratings or the equivalent from another ratings agency) are used for
cash deposits and the level of cash is reviewed on a regular basis.
Further details of the Company’s management of these risks can be found in
note 13 of the Company’s 2024 Annual Report.
There have been no changes to the management of or the exposure to credit risk
since the date of the Annual Report.
Fair Value Hierarchy
Fair value is the amount for which an asset could be exchanged, or a liability
settled, between knowledgeable willing parties in an arm’s length
transaction.
The Group complies with IFRS 13 in respect of disclosures about the degree of
reliability of fair value measurements. This requires the Group to
classify, for disclosure purposes, fair value measurements using a fair value
hierarchy that reflects the significance of the inputs used in making the
measurements.
The levels of fair value measurement bases are defined as follows:
Level 1: fair values measured using quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2: fair values measured using valuation techniques for all inputs
significant to the measurement other than quoted prices included within Level
1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
Level 3: fair values measured using valuation techniques for which any
significant input to the valuation is not based on observable market data
(unobservable inputs).
All investments were classified as Level 3 investments as at, and throughout
the period to, 30 September 2024. Page 28 presents the movements on
investments measured at fair value. Total gains and losses on assets measured
at Level 3 are recognised as part of Gains on Investments in the Consolidated
Income Statement, and no other comprehensive income has been recognised on
these assets.
When using the price of a recent transaction in the valuations, the Company
looks to ‘re-calibrate’ this price at each valuation point by reviewing
progress within the investment, comparing against the initial investment
thesis, assessing if there are any significant events or milestones that would
indicate the value of the investment has changed and considering whether a
market-based methodology (ie. using multiples from comparable public
companies) or a discounted cashflow forecast would be more appropriate.
The main inputs into the calibration exercise, and for the valuation models
using multiples, are revenue, EBITDA, AuM, and P/E multiples (based on the
most recent revenue, EBITDA, AuM, or earnings achieved and equivalent
corresponding revenue, EBITDA, AuM, or earnings multiples of comparable public
companies), quality of earnings assessments and comparability difference
adjustments. Revenue multiples are often used, rather than EBITDA or earnings,
due to the nature of the Group’s investments, being in fast-growing, small
financial services companies which are not normally expected to achieve
profitability or scale for a number of years. Where an investment has achieved
scale and profitability the Group would normally then expect to switch to
using an EBITDA or earnings multiple methodology.
The main input into the PWERM (‘Probability Weighed Expected Return
Methodology’) is the probability of conversion. This method is used for the
convertible loan notes held by the Company.
The fair valuation of private company investments is influenced by the
estimates, assumptions and judgements made in the fair valuation process.
A sensitivity analysis is provided below which recognises that the valuation
methodologies employed involve subjectivity in their significant unobservable
inputs and illustrates the sensitivity of the valuations to these inputs. The
inputs have been flexed with the exception of the Sales Price valuation
approach as it does not involve significant subjectivity. The table also
provides the range of values for the key unobservable inputs.
As at 30 September 2024
Valuation approach Fair value of Key Other Applied Multiple Range Weighted Sensitivity Change in
investments unobservable inputs unobservable inputs* average +/- valuation
£’000 multiple % +/(-) £’000
applied#
Market approach using Revenue Multiple a, b, c, g 10x-35.4x 6.9 10% 16,883/
(16,209)
comparable traded multiples Earnings Multiple a, b, c, g 8.3x-15.0x 12.0 10% 3,319/
(3,319)
AUM Multiple a, b, c, g 0.1x 0.1 10% 264/-
Illiquidity discount d, g 0%-80% 25.6% 30% 26,080/
(22,988)
Transaction implied premiums and discounts e, g 33%-738% 142.2% 30% 7,209/
(8,393)
Net Asset Value** Discount to NAV a n/a n/a 10% (762)
PWERM Probability of conversion a n/a n/a 25% 315/(315)
CPORT^ Transaction price a, e, g n/a n/a 10% 802/(802)
Sales Price n/a n/a n/a n/a n/a n/a
# Weighted average is calculated by reference to the fair value of holdings as
at the respective year-end. This therefore gives a clearer indication of the
typical multiple or adjustment being applied across the portfolio.
** LP (‘Limited Partnership’) investments are held at net asset values
provided by the relevant LP fund administrators. These are adjusted by
benchmark movements as appropriate.
^ Whilst a recent or expected transaction price may be the most appropriate
basis for a valuation, it will be corroborated by other techniques which
factor in the unobservable inputs noted below.
As at 30 September 2023
Valuation approach Fair value of Key Other Applied Multiple Range Weighted Sensitivity Change in
investments unobservable inputs unobservable inputs* average +/- valuation
£’000 multiple % +/(-) £’000
applied#
Market approach using 217,054 Revenue Multiple a, b, c, g 2.3x - 28.0x 6.0x 10% 17,564/ (17,554)
comparable traded multiples Earnings Multiple a, b, c, g 6.3x - 18.6x 11.0x 10% 3,146/
(2,423)
AUM Multiple a, b, c, g 0.1x 0.1x 10% 264/-
Illiquidity discount d, g 0% - 50% 32.3% 30% 12,558/ (10,920)
Transaction implied premiums and discounts e, g 0% - 630% 109.3% 30% 17,063/ (18,023)
Net Asset Value** 8,264 Discount to NAV a n/a n/a 10% (826)
PWERM 6,068 Probability of conversion a n/a n/a 25% 248/(248)
Expected transaction price 7,135 Execution risk discount a,f n/a n/a 10% 713/(713)
CPORT^ 16,414 Transaction price a, e, g n/a n/a 10% 1,641/ (1,641)
Sales Price 10,148 n/a n/a n/a n/a n/a n/a
*Significant unobservable inputs
The variable inputs applicable to each broad category of valuation basis will
vary dependent on the particular circumstances of each private company
valuation. An explanation of each of the key variable inputs is provided
below. The assumptions and decisions process in relation to the inputs is
described in note 19.12 within the Annual Report.
(a) Application of valuation basis
Each investment is assessed independently, and the valuation basis applied
will vary depending on the circumstances of each investment. When an
investment is pre-revenue, the focus of the valuation will be on assessing the
recent transaction and the achievement of key milestones since investment.
Adjustments may also be made depending on the performance of comparable
benchmarks and companies. For those investments where a trading multiples
approach can be taken, the methodology will factor in revenue, earnings or
assets under management as appropriate for the investment.
(b) Selection of comparable companies
The selection of comparable companies is assessed individually for each
investment and the relevance of the comparable companies is continually
evaluated at each valuation date. Key criteria used in selecting appropriate
comparable companies are the industry sector in which they operate, the
geography of the company’s operations, the respective revenue and earnings
growth rates, operating margins, company size and development stage.
Typically, between 4 and 10 comparable companies will be selected for each
investment, but this can vary depending on how many relevant comparable
companies are identified. The resultant revenue or earnings multiples or share
price movements derived will vary depending on the companies selected and the
industries they operate in. Given the nature of the investments the Company
makes there are not always directly comparable listed companies, in such cases
comparables will be selected whose businesses bear similarity to the relevant
investment, in such cases the need for an additional discount / premium to the
comparables will be assessed at each valuation date.
(c) Estimated sustainable revenue or earnings
The selection of sustainable revenue or earnings will depend on whether the
company is sustainably profitable or not, and where it is not then revenues
will be used in the valuation. The valuation approach will typically assess
companies based on the last twelve months of revenue or earnings, as they are
the most recent available and therefore viewed as the most reliable. Where a
business has volatile earnings on a year-on-year basis, revenue or earnings
may be assessed over a longer period. Where a company has reliably forecasted
earnings previously or there is a change in circumstance at the business which
will impact earnings going forward, then forward estimated revenue or earnings
may be used instead.
(d) Application of illiquidity discount
An illiquidity discount may be applied either through the calibration of a
valuation against the most recent transaction, or by application of a specific
discount. The discount applied where a calibration (see (e) below) is not
appropriate is dependent on factors specific to each investment, such as
quality of earnings or revenues and potential exit scenarios.
(e) Transaction implied premium and discount
Where there is an implied company valuation available as a result of an
external arm's length transaction, the ongoing valuation will be calibrated to
this by deriving a company valuation with reference to the average multiple
from a set of comparable companies and comparing this to a transaction implied
valuation. This can result in an implied premium or discount compared to
comparable companies at the point of transaction. This discount or premium
will be considered in future valuations and may be reduced due to factors such
as the time since the transaction and company performance. Where a calibrated
approach is not appropriate, a discount for illiquidity may be applied as
noted in (d) above.
(f) Execution risk
An execution risk discount is applied to all investments where an
arm’s-length transaction is due to take place but hasn’t closed prior to
the reporting period end. The discount applied is dependent on the progress of
the negotiations and outstanding matters that may impact on the expected
price. When valuing in line with an expected transaction the arm’s-length
nature of the deal will be assessed, and term sheets will have been received.
(g) Liquidity preference
The company’s investments are typically venture investments with downside
protections such as liquidation preference and anti-dilution provisions.
Unlike ordinary share structures typically seen in the public or private
markets, these structures protect the value of the Company’s position in the
event of a reduction in the enterprise value of an investee company from the
price paid. Where a valuation indicates the enterprise value of an investment
has fallen the enterprise value will be fed into the investee companies’
‘waterfall’ (which ranks shares by seniority/preference in the event of a
liquidation event) to calculate the value of the Company’s position.
The following table presents the movement of investments measured at fair
value, based on fair value measurement levels.
Level 3
Six months to Year to
30 September 31 March
2024 2024
£’000 £’000
Opening balance 265,083 254,295
Purchases at cost 12,590 15,976
Realisation proceeds (9,930) (22,790)
Gains on investments held at fair value 4,295 17,602
Closing balance as at 30 September 263,448 266,083
.
Independent Review Report to Augmentum Fintech plc
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2024 is not prepared,
in all material respects, in accordance with UK adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom’s Financial Conduct Authority.
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2024 which comprises the Condensed Consolidated Statement of
Comprehensive Income, Consolidated Statement of Changes in Equity, Condensed
Consolidated Statement of Financial Position, Condensed Consolidated Statement
of Cash Flows and the related notes.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, “Review of Interim Financial Information Performed by
the Independent Auditor of the Entity” (“ISRE (UK) 2410”(Revised)). A
review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with International
Standards on Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, “Interim Financial Reporting”.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410 (Revised), however future events or conditions may cause the
group to cease to continue as a going concern.
Responsibilities of Directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom’s Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the Disclosure Guidance and
Transparency Rules of the United Kingdom’s Financial Conduct Authority and
for no other purpose. No person is entitled to rely on this report unless such
a person is a person entitled to rely upon this report by virtue of and for
the purpose of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other purpose
and we hereby expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
25 November 2024
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
.
Interim Management Report
Principal Risks and Uncertainties
A review of the half year and the outlook for the Company can be found in the
Chairman’s Statement and in the Portfolio Manager’s Review. The principal
risks and uncertainties faced by the Company fall into the following broad
categories: investment risks; portfolio diversification risk; cash risk;
credit risk; valuation risk; operational risk; and key person risk.
Information on these risks is given in the Annual Report for the year ended
31 March 2024.
The Board believes that the Company’s principal risks and uncertainties have
not changed materially since the date of that report and are not expected to
change materially for the remaining six months of the Company’s financial
year.
Related Party Transactions
During the first six months of the current financial year, no transactions
with related parties have taken place which have materially affected the
financial position or the performance of the Group.
Going Concern
The Directors believe, having considered the Company’s investment objective,
risk management policies, capital management policies and procedures, and the
nature of the portfolio and the expenditure projections, that the Group has
adequate resources, an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the foreseeable
future.
Directors’ Responsibilities
The Board of Directors confirms that, to the best of its knowledge:
(i) the condensed set of financial statements contained within this Half Year
Report has been prepared in accordance with Accounting Standard IAS 34,
‘Interim Financial Reporting’, as adopted in the UK;
(ii) the condensed set of financial statements give a true and fair view of
the assets, liabilities, financial position and return of the issuer and the
undertakings included in the consolidation; and
(iii) the Half Year Report includes a fair review of the information required
by 4.2.7R and 4.2.8R of the UK Listing Authority Disclosure Guidance and
Transparency Rules.
In order to provide these confirmations, and in preparing these financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable IFRS have been followed, subject to any material
departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business;
and the Directors confirm that they have done so.
On behalf of the Board of Directors
William Reeve
Chairman
25 November 2024
.
Glossary and Alternative Performance Measures
Alternative Investment Fund Managers Directive (“AIFMD”)
Agreed by the European Parliament and the Council of the European Union and
transposed into UK legislation, the AIFMD classifies certain investment
vehicles, including investment companies, as Alternative Investment Funds
(“AIFs”) and requires them to appoint an Alternative Investment Fund
Manager (“AIFM”) and depositary to manage and oversee the operations of
the investment vehicle. The Board of the Company retains responsibility for
strategy, operations and compliance and the Directors retain a fiduciary duty
to shareholders.
Alternative Performance Measures (“APMs”)
The measures the Board of Directors uses to assess the Company’s performance
that are not defined under the International Financial Reporting Standards but
which are viewed as particularly relevant for investment trusts. Definitions
of the terms used and the basis of calculation are set out in this Glossary
and the APMs are indicated with an asterisk (*).
Convertible Loan Note
A convertible loan note is a loan which bears interest and is repayable but
may convert into shares under certain circumstances.
Discount or Premium
A description of the difference between the share price and the net asset
value per share. The size of the discount or premium is calculated by
subtracting the share price from the net asset value per share and is usually
expressed as a percentage (%) of the net asset value per share. If the share
price is higher than the net asset value per share the result is a premium. If
the share price is lower than the net asset value per share, the shares are
trading at a discount.
Gross IRR on Capital Deployed
Is the annualised return arising on investment related cash flows taking
account of the timing of each cash flow, and assuming all investments are
realised at their carrying value at the period end. It does not take account
of the Group's expenses or transactions with shareholders. It is derived by
computing the discount rate at which the present value of all investment
related cash flows are equal to the original amounts invested.
Initial Public Offering (“IPO”)
An IPO is a type of public offering in which shares of a company are sold to
institutional investors and usually also retail (individual) investors.
Through this process, colloquially known as floating, or going public, a
privately held company is transformed into a public company.
Internal Rate of Return (“IRR”)
Is the annualised return on an investment calculated from the cash flows
arising from that investment taking account of the timing of each cash flow.
It is derived by computing the discount rate at which the present value of all
subsequent cash flows arising from an investment are equal to the original
amount invested.
Performance fee – Company
AFML is entitled to a performance fee (previously referred to as carried
interest) in respect of the performance of the Company's investments. Each
performance fee operates in respect of investments made during a 24 month
period and related follow-on investments made for a further 36 month period,
save that the first performance fee shall be in respect of investments
acquired using 80% of the net proceeds of the Company’s IPO in March 2018
(including the Initial Portfolio), and related follow-on investments.
Subject to certain exceptions, AFML will receive, in aggregate, 15% of the net
realised cash profits from the sale of investments made over the relevant
period once the Company has received an aggregate annualised 10% realised
return on investments (the ‘hurdle’) made during the relevant period.
AFML's return is subject to a ‘’catch-up’’ provision in its favour.
The performance fee is paid in cash as soon as practicable after the end of
each relevant period, save that at the discretion of the Board payments of the
performance fee may be made in circumstances where the relevant basket of
investments has been realised in part, subject to claw-back arrangements in
the event that payments have been made in excess of AFML’s entitlement to
any performance fees as calculated following the relevant period.
The performance fee payable by the Company to AFML is accrued in the Company's
financial statements and eliminated on consolidation in the Group financial
statements.
Performance Fee – AFML
The performance fee arrangements within AFML were set up with the aim of
incentivising employees of AFML and aligning them with shareholders through
participation in the realised investment profits of the Group.
Any performance fee received by AFML will be allocated to its employees on a
discretionary basis by the Management Engagement & Remuneration Committee of
the Company.
NAV per share Total Return*
The theoretical total return on the NAV per share, reflecting the change in
NAV during the period assuming that any dividends paid to shareholders were
reinvested at NAV at the time the shares were quoted ex-dividend. This is a
way of measuring investment management performance of investment trusts which
is not affected by movements in the share price discount/premium.
Net Asset Value (“NAV”)
The value of the Group’s assets, principally investments made in other
companies and cash being held, minus any liabilities. The NAV per share is
also described as ‘shareholders’ funds’ per share. The NAV is often
expressed in pence per share after being divided by the number of shares in
issue. The NAV per share is unlikely to be the same as the share price, which
is the price at which the Company’s shares can be bought or sold by an
investor. The share price is determined by the relationship between the demand
and supply of the shares.
Net Asset Value (“NAV”) per share after performance fee*
The NAV of the Group as calculated above less the performance fee accrual made
by the Company divided by the number of issued shares.
Net Asset Value (“NAV”) per share after performance fee total return*
The Directors regard the Group’s NAV per share after performance fee total
return as being the critical measure of value delivered to shareholders over
the long term. The Board considers that the NAV per share after performance
fee better reflects the current value of each share than the consolidated NAV
per share figure, the calculation of which eliminates the performance fee.
Partnership
Augmentum I LP, a limited partnership registered in Jersey and a wholly-owned
subsidiary of the Company.
Total Shareholder Return*
The theoretical total return per share reflecting the change in share price
during the period and assuming that any dividends paid were reinvested at the
share price at the time the shares were quoted ex-dividend.
Unquoted investment
Investments in unquoted securities such as shares and debentures which are not
quoted or traded on a stock market.
.
The half year report will shortly be available for inspection on the Company's
website (https://augmentum.vc) and the National Storage Mechanism website
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism).
- END -
Copyright (c) 2024 PR Newswire Association,LLC. All Rights ReservedRecent news on Augmentum Fintech
See all newsREG-Augmentum Fintech plc: Notice of Annual Results and Investor Meet Company Presentation, and Capital Markets Day
AnnouncementREG-Augmentum Fintech plc: Notice of Capital Markets Day
AnnouncementREG-Augmentum Fintech plc: New investment into investment platform RetailBook
AnnouncementREG-Augmentum Fintech plc: Factsheet as at 31 March 2025
AnnouncementREG-Augmentum Fintech plc: Total Voting Rights
Announcement