Eight Capital Ptnrs. - Corporate Update
27/09/2021 06:59
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RNS Number : 9751M Eight Capital Partners PLC 27 September 2021
27 September 2021
Eight Capital Partners plc
("ECP", "Eight Capital" or "the Company")
Corporate Update and Announcement of Transformational Growth Strategy
Eight Capital (AQSE: ECP), the financial services operating company, whose
wholly-owned subsidiaries, Epsion Capital Limited ("Epsion") and Innovative
Finance Srl ("InnFin"), source and deliver tech, fintech and other
on-trend-sector transactions, is pleased to provide a comprehensive corporate
update following the successful completion of several corporate transactions
and confirmation of the Company's transformation from an investing company to
an operational business within the financial services sector.
Background
Following the Company's acquisition of InnFin in May 2021, the Board stated
that ECP would re-energise its focus on financial services investments with
particular attention being paid to fintech, financial services, banking
digitisation and crypto banking themes. The Board believes that the trend of
major technological change in the way financial services are delivered will
enable faster, cheaper, easier and more accessible financial services.
Furthermore, there will likely be a fundamental change to the sector's
landscape as a result of industry consolidation driven by new, more agile
entrants.
In order for Eight Capital to participate in and benefit from this major
change and to transact at scale, it needs to significantly strengthen its
balance sheet and financial resources, align its operations and grow its
market capitalisation.
The recent corporate transactions undertaken by the Company, together with the
intended actions outlined below, are expected to transform ECP and enable it
to actively participate in these trends.
Recent corporate transactions
The Company has completed the following strategic transactions in recent
months, initiating the path to reshaping the business:
· the strategic acquisition of financial services business InnFin which
provides corporate finance and M&A services with a particular focus on the
financial services sector; and
· the disposal of Italian financial services business Finance Partners
Group SpA for €2.15 million announced on 4 August 2021.
In addition, to help reshape its balance sheet and build scale, the Company
also:
· purchased €40 million 2.5% Fixed Rate Secured Bonds at par value
(the "Fixed Rate Bonds") which significantly increased ECP's gross assets,
announced on 25 August 2021 from IWEP Limited ("IWEP"), a company controlled
by ECP's Chairman, Mr Dominic White. Consideration for the acquisition of the
Fixed Rate Bonds was settled by a one-year vendor loan (the "Vendor Loan").
This purchase significantly increased ECP's gross assets; and
· launched €25 million 4.8% fixed rate five-year bonds (the "4.8%
Bonds"), of which, €50,000 were placed on launch and listed on the Vienna
Stock Exchange, announced on 4 September 2021.
These transactions have consolidated and extended the Company's services and
assisted it in developing a platform from which it can continue to build as a
financial services Company and a stronger base from which it can raise third
party capital.
Change from an investing company into a financial services operating company
The ECP Board considers there to be value creation opportunities for
shareholders from the further aligning and expansion of the activities of its
wholly owned financial services operating subsidiaries, Epsion and InnFin
(together the "Operating Subsidiaries"), which deliver tech, fintech and other
on- trend transactions to the markets. The Operating Subsidiaries have been
advising on IPOs, RTOs, M&A, fundraising transactions and other corporate
finance matters.
Through the strategic utilisation of its growing in-house capital resources,
in addition to the services above, the Company may provide significant support
to the transactions managed by its Operating Subsidiaries through the
provision of early-stage and growth co-investment capital. The competitive
advantage of the new operating group is its flexibility as to where it invests
in the capital stack pyramid, including being equally comfortable with private
or public debt and equity positions, convertibles, and structured equity or
debt facilities. Much of the financial services advisory market only delivers
third party capital and advice, without direct access to supportive in-house
capital, or only having access to in-house capital lines with a less flexible
mandate.
The Company has therefore moved away from a pure investing strategy to a
financial services operating strategy whereby its clients' financial services
transactions can be supported by in-house capital.
Key strategic objectives
The Board's objective is to grow the market capitalisation of the Company
towards and beyond £50 million so that it establishes a strong balance sheet
base from which to significantly expand its operations and its own equity
valuation and therefore become increasingly attractive to investors.
The Board recognises that, in order to build value, the next steps in the
Company's development will require a significant restructuring of ECP's
balance sheet, including, inter alia, the conversion of some or all of ECP's
existing debt into equity alongside a share placing, which may include an open
offer to all shareholders.
The recent launch of the 4.8% Bonds earlier this month was a logical next step
towards enabling the expansion of the Company's balance sheet, whilst also
providing better medium-term visibility of a refinancing, as ECP's existing
listed bonds approach maturity (€3.99 million issued with a coupon of 7% and
a 26 July 2022 maturity date (the "7% Bonds")).
To provide further support and commitment to ECP's growth strategy, IWEP, from
which the Company recently acquired the Fixed Rate Bonds in consideration for
the Vendor Loan, will, conditional on appropriate shareholder approvals and
regulatory clearance from the Takeover Panel in respect of a Rule 9 whitewash
resolution, convert up to €25 million of the remaining Vendor Loan into
equity, alongside a planned third party placing and potential open offer to
all ECP shareholders. The Company also intends to provide an opportunity for
all investors to convert debt to equity on the same terms, to include the
current outstanding 7% Bonds.
As part of this balance sheet restructuring, IWEP Limited and the independent
directors of ECP have agreed that €15 million of the outstanding Vendor Loan
will be satisfied by the issue at par of €15 million of 4.8% Bonds.
Application for the listing of these Bonds on the Vienna Stock Exchange has
been made and admission is expected to occur on 27 September 2021.
Given the difference in funding associated with the Vendor Loan and to ensure
the Company's cashflows are not disadvantaged while the proposed restructuring
steps are taking place, IWEP has agreed that the interest rate on the Vendor
Loan will be reduced to nil from the date of the issuance of the 4.8% Bonds,
until such time as all of the above steps have been completed.
Once completed, this conversion of debt into equity, alongside an equity
fundraise, will transform the Company's balance sheet and scale as well as
positively impacting its cashflow through a lower overall cost of funding.
Management team
Integral to the success of ECP's transition to an operating business is the
senior management team, which has recently been strengthened with the
appointment to the Board in June of former Bank of England Chief Financial
Accountant, David Bull as a Non-Executive Director.
Following this successful transition, the Board has appointed Mr Bull as full
time Chief Executive Officer, with responsibility for leading the further
development of ECP's financial services businesses, developing new lines of
business, both organically and through acquisition, all within the context of
fintech services. He will also be strengthening the operational management
team through further additions in financial management and compliance, which
will be at the heart of the Company's operating activities.
As well as organic growth through the development of new financial services
business lines (tech led), the Company will consider strategic acquisitions to
boost revenue and market presence and consequently provide a return on
investment.
Commenting on the transformational progress made recently by the Group,
Dominic White, ECP's Executive Chairman said:
"We are pleased to have reached a point whereby we can provide more clarity
about the short to medium term plans for the Company. The most progressive
financial services businesses are deploying new technology in their operations
which is not only impressive but also looks likely to dramatically change the
industry in the coming years. We want to access, invest in and implement some
of these technologies in our existing and future operating subsidiaries."
"We have strengthened the senior management team with David's appointment as
CEO and have demonstrated our intent with the completion of the recent
transactions. A clear pathway lies ahead for the transformation of the
business in terms of its size, market value and influence in financial
services, notably through the use of fintech. We have an active and growing
pipeline of transactions through our Operating Subsidiaries, we are seeking to
raise and generate capital to co-invest through them, and we have corporate
level potential strategic operating partnerships that we intend to deliver in
the coming months."
"Given the anticipated activity levels and the intended scale of a
much-enlarged operating business, the Board is also considering a move to the
London Stock Exchange's Standard List. As Chairman and as a substantial
investor, I believe that this will lead to greater growth and increased
opportunities as the business moves forwards."
Related Party Transaction
Dominic White, a director of the Company, is also a director and the
beneficial owner of IWEP. Pursuant to AQSE Rule 4.6, variation of the Vendor
Loan and subsequent issue of 4.8% Bonds to IWEP by the Company constitutes a
related party transaction.
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation and the directors of the Company are responsible for
the release of this announcement.
Eight Capital Partners plc +44 20 3808 0029
Dominic White - Executive Chairman info@eight.capital
David Bull - Chief Executive Officer
Cairn Financial Advisers LLP +44 20 7213 0880
AQSE Corporate Adviser
Jo Turner / James Lewis
Walbrook PR Limited +44 20 7933 8780
Paul Vann/Nicholas Johnson Paul.vann@walbrookpr.com
About Eight Capital Partners:
Eight Capital Partners plc is an international financial services company
focused on owning and operating businesses engaged in "Fintech" operations,
from the digitisation of banking services, through to blockchain-backed
decentralised finance companies and "crypto banks".
ECP provides equity, debt, and equity-related investment capital to companies
seeking capital for growth and development, consolidation or acquisition, or
pre-IPO financing. The Company seeks to generate an attractive rate of return
for shareholders, predominantly through capital appreciation, by maximising
the revenues, profits and value of its operating subsidiaries, and taking
advantage of the increasing number of acquisition opportunities within the
continuously developing global technology, media, telecoms and financial
services sectors. www.eight.capital (http://www.eight.capital)
Eight Capital Partners operates two subsidiary businesses:
Epsion Capital:
Epsion Capital is an independent corporate advisory firm based in London with
an extensive experience in UK and European capital markets. The team of senior
and experienced ECM and M&A professionals is specialised across multiple
markets, sectors and geographies and it prides itself on a commercial approach
that allows the clients to achieve their growth ambitions.
www.epsioncapital.com (http://www.epsioncapital.com/)
Innovative Finance:
Innovative Finance is a corporate finance advisory business that develops
mergers and acquisitions and financing solutions across multiple sectors,
primarily in Europe, with access to international transactions. It is
currently working on transactions in the USA and Europe which are linked to
technological developments in the financial services industry, AI,
cybersecurity, e-commerce and cannabis. www.innovfinance.com
(http://www.innovfinance.com)
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