REG - EMV Capital PLC - Proposed Subscription and Retail Offer; Update

EMV CapitalAnnouncement

03/12/2024 07:00

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RNS Number : 5129O  EMV Capital PLC  03 December 2024

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION
(EU) 596/2014 AS IT FORMS PART OF DOMESTIC LAW IN THE UNITED KINGDOM BY VIRTUE
OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (MAR). IN ADDITION, MARKET
SOUNDINGS (AS DEFINED IN MAR) WERE TAKEN IN RESPECT OF THE FUNDRAISING WITH
THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF INSIDE INFORMATION (AS DEFINED
IN MAR), AS PERMITTED BY MAR. THIS INSIDE INFORMATION IS SET OUT IN THIS
ANNOUNCEMENT. THEREFORE, THOSE PERSONS THAT RECEIVED INSIDE INFORMATION IN A
MARKET SOUNDING ARE NO LONGER IN POSSESSION OF SUCH INSIDE INFORMATION
RELATING TO THE COMPANY AND ITS SECURITIES.

 

EMV Capital plc

 

("EMV Capital" or the "Company" or the "Group")

 

Proposed Subscription and Retail Offer

to raise up to £1.5 million

 

Update on financial operations and the portfolio

 

EMV Capital plc (AIM: EMVC), the deeptech and life sciences VC investment
group, today announces its intention to raise up to £1.5 million
(Fundraising) through a proposed subscription by, and retail offer to, new and
existing investors for new ordinary shares in the capital of the Company (New
Shares) at an issue price of £0.50 per New Share (Issue Price). The Issue
Price represents a premium of approximately 15 per cent. to the closing
mid-market price of 43.5 pence per ordinary share in the capital of the
Company on 2 December 2024 (the latest practicable date prior to the
publication of this announcement).

A further announcement will be made by the Company shortly regarding the
Retail Offer (as defined below) and its terms. It is expected that the Retail
Offer will launch today, 3 December 2024, shortly after this Announcement and
will be open for applications up to 4.30 p.m. on 4 December 2024, or such
later time and date as the Company and Winterflood Securities Limited
(Winterflood) may agree. The result of the Retail Offer is expected to be
announced by the Company on or around 5 December 2024. For the avoidance of
doubt, the Retail Offer is in addition to, and conditional upon the completion
of, the Subscription. There can be no guarantee that the Retail Offer will be
fully subscribed.

The Fundraising will be effected pursuant to the existing authorities to allot
equity securities granted at the Company's annual general meeting on 10 July
2024.

1.    Background to and reasons for the Fundraising

EMV Capital is positioning itself to become a leading venture capital (VC)
investment group, specialising in the deeptech and life sciences sectors. The
Company aims to deliver shareholder value by identifying and investing in
companies with transformative technologies both within the UK and
internationally.

The Group's strategy focuses on achieving capital returns through the
profitable exits of selected portfolio companies, as well as generating
carried interest from its growing Funds practice. An example of this approach
is demonstrated through the strong performance of the Group's Venture Building
programme. Over the past two years, this initiative has driven significant
growth in the fair value of EMV Capital's direct holdings, notably in the
following cohort portfolio companies to a total of £7.1 million, achieved
with an initial total investment of just £0.4 million in cash, complemented
by £0.4 million of in-kind services. This performance highlights EMV
Capital's ability to create significant value with a disciplined and
innovative approach to investment.

 Portfolio company                Business sector          Direct FV increase
 Deeptech Recycling Technologies  Plastic waste recycling  £1.8 million
 DName-iT                         Lab blood verification   £1.6 million
 Ventive                          Heat pump developer      £0.9 million
 Vortex Biosciences               Liquid biopsy/oncology   £2.8 million
 Total                            -                        £7.1 million

In the first half of 2024, EMV Capital achieved a significant milestone,
surpassing £100 million in assets under management (AUM). This coincided with
the successful launch of the Company's Fund Management practice. As announced
on 30 September 2024 in its interim results for the six months ended 30 June
2024 (Interim Results), the Company's AUM comprised a fair value of £41
million in directly owned holdings and £65.7 million in managed and
third-party holdings. EMV Capital's portfolio now spans over 70 companies,
bolstered by the May 2024 mandate to manage the Cambridge-based Martlet
Capital portfolio.

The Company is progressing its strategy to achieve operational
self-sufficiency by covering most, if not all, core costs through recurring
fund management fees, value creation services, corporate finance activities,
and other income streams. The Directors have identified a route to break-even,
targeting recurring annual fund management fees of over £1 million. This will
be supported by a targeted increase of £30 million to £50 million (or more)
in AUM during 2025/26.

As outlined in the annual accounts for the period ending 31 December 2023, the
Group, including its subsidiaries, identified a cash requirement of
approximately £3.6 million to fund operations through to June 2025. Of this,
the core operating business (excluding consolidated portfolio company
subsidiaries Glycotest, ProAxsis and CetroMed, which are expected to secure
third party funding), requires £1.6 million. The Company noted that funding
sources could include fee income, the sale of portfolio assets or a share
placement. Additionally, the Company has explored debt financing options,
including the potential availability of a £750,000 facility.

The Directors have carefully evaluated all funding options available to the
Company, taking into account current asset values, debt financing costs, the
Company's share price, and the potential dilutive effects of equity
placements. Ultimately, the Directors concluded that a targeted Fundraising
represents the optimal solution, enabling the Company to strengthen its
balance sheet, continue growing the fair value of its directly held assets,
and maintain a low debt position. This approach means that over the next 12
months the Group will remain well-positioned for sustainable growth and
long-term value creation.

2.    Update on financial operations and the portfolio

Since the announcement of the Company's Interim Results, the Company is
pleased to provide the following update on its financial operations and the
portfolio:

·        Group 'core' income and losses

o Unaudited Group 'core' income for the ten month period to 31 October 2024 is
c.£2 million (as compared to £1.2 million for the full year ended 31
December 2023). This is split as to £0.9 million for services fees, £0.6
million for fundraising fees, and £0.5 million for fund management fees.

o Unaudited Group 'core' losses for the ten month period to 31 October 2024
are c.£1.1 million (as compared to £1.1 million for the full year ended 31
December 2023).

o Group 'core' excludes subsidiary portfolio companies (Glycotest, ProAxsis
and CetroMed), which are financed by third party investors.

·      Wanda Connected Healthcare Systems

As announced on 28 May 2024, the Group acquired a 30 per cent. direct holding
in Wanda for c.£62,000 paid for by in-kind services. Benefiting from the
Group's value creation services as a member of the Venture Building programme,
Wanda is expected to complete a c.£1 million equity investment round on 6
December 2024 at a pre-money valuation of £5 million. Following completion of
that investment round, the fair value of the Group's fully diluted holding
will be £1.35 million, a 21.5x increase. Further details of this transaction,
including the Group's new direct shareholding and third party assets under
management, are anticipated to be announced on or around 9 December 2024.

·      Q-Bot

As announced on 30 July 2024, Q-Bot raised £1.5 million to progress its
revised business plan, which included rationalising its business into two
separate divisions, an installations business and a technologies focused
business. The planned restructuring has experienced a delay in execution and a
refined business plan, with Q-Bot having launched on 2 December 2024 a further
fundraising programme of c.£1.3 million to complete its pivot to a technology
and partnerships focused business, and its exit from direct services.

The Q-Bot fundraising is by way of a convertible loan note and advance
subscription agreement, each on advantageous conversion terms with a
conversion price substantially lower than the previous price per share. The
Group intends to participate with a direct investment of c.£0.31 million,
which it intends to settle within a two week period by way of conversion of
receivables (c.£60,000) and the issue of shares in EMV Capital (c.£0.25
million). Should EMV Capital shares be issued, it is anticipated that the
price per EMV Capital share would be the higher of: (i) the middle-market
closing price for EMV Capital shares on the day before the investment; and
(ii) the average middle-market closing price for EMV Capital shares over the
12 month period preceding its investment (which, for example, is 62.3 pence as
at 2 December 2024, the latest practicable date prior to the publication of
this announcement). In addition, these shares, if issued, would be subject to
orderly market provisions such that if they are disposed of they must be sold
through the Company's broker.

As the proposed Q-Bot fundraising does not establish a fixed price (given that
the conversion price of the convertible instruments is contingent upon factors
such as a subsequent fundraising round, an exit event, or the maturity date),
the Directors are unable to estimate any changes to the current fair value of
Q-Bot upon completion of the fundraising. However, in the absence of
significant growth prior to its next equity fundraising, it is anticipated
that the fair value of Q-Bot could be materially lower than the previously
reported figure.

3.    Use of proceeds

The net proceeds from the Fundraising, in combination with the Group's fee
income, are intended to be utilised over the next 12 months to:

·   provide ongoing working capital to support the Company's day-to-day
operations;

·   develop and enhance investor reporting infrastructure for EMV Capital
Partners (EMVCP), the Company's wholly owned corporate finance and venture
capital firm, in response to the continued growth of its syndicated investor
base and Fund management activities;

·   drive growth through strategic hires to strengthen the Company's
operational and strategic capabilities; and

·   bolster balance sheet strength and maintain 'dry powder' for capital
efficient investments, with a particular focus on future Venture Building
initiatives.

This use of funds is designed to ensure EMV Capital remains well-positioned
for sustained growth, operational efficiency, and continued value creation.

4.    Details of the Fundraising

General details

EMVCP, acting as bookrunner, has introduced certain new and existing investors
who intend to participate in the Fundraising, both through the Subscription
and the Retail Offer (each as defined below). It is anticipated that such
investors will subscribe for up to 3,000,000 New Shares at the Issue Price to
raise up to £1.5 million.

The Fundraising comprises:

·   a subscription by new and existing investors at the Issue Price for
1,760,000 New Shares (Subscription Shares) raising £880,000 (Subscription);
and

·   the Company intends to launch a retail offer through the Winterflood
Retail Access platform (WRAP) for qualifying retail investors in the UK to
subscribe for up to 1,240,000 New Shares at the Issue Price (Retail Offer
Shares) to raise up to a further £620,000 (Retail Offer).

The issue of New Shares will be pursuant to the Directors' existing authority
to allot ordinary shares in the capital of the Company, as provided at its
2024 annual general meeting.

The Issue Price represents a premium of approximately 15 per cent. to the
closing mid-market price of 43.5 pence per ordinary share in the capital of
the Company on 2 December 2024, being the latest practicable date prior to the
publication of this announcement.

The Fundraising is not being underwritten.

The New Shares, when issued, will be fully paid and will rank pari passu in
all respects with the rest of the Company's ordinary share capital.

Director / PDMR and substantial shareholder participation

Certain Directors, being Charles Spicer (Non-Executive Chair), Ilian Iliev
(Chief Executive Officer) and Ed Hooper (Executive Director), and members of
the Company's senior management team (PDMRs) intend to participate in the
Fundraising, both through the Subscription and the Retail Offer, for an
aggregate subscription amount of approximately £245,000 through the issue of
490,000 New Shares at the Issue Price.

It is also anticipated that A Beckman plc SSAS (Small Self Administered
Pension Scheme), which is associated with Melvin Lawson, a substantial
shareholder in the Company, will participate in the Fundraising through the
Subscription (Substantial Shareholder Participation). It is anticipated that
the Substantial Shareholder Participation will comprise approximately £50,000
through the issue of 100,000 New Shares at the Issue Price.

Further details will be announced as appropriate in due course.

Subscription

The Subscription is not conditional upon the completion of the Retail Offer.

The timing of the closing of the Subscription and the allocation of the
Subscription Shares is to be determined at the discretion of the Company. A
further announcement confirming final details of the Subscription will be
announced as soon as practicable after the closing of the bookbuilding process
in respect of the Subscription, anticipated to be on 3 December 2024.

Retail Offer

The Directors believe it to be important to provide existing shareholders and
qualifying retail investors in the United Kingdom with an opportunity to
participate in the Fundraising and to subscribe for New Shares.

A further announcement will be made by the Company shortly regarding the
Retail Offer and its terms. It is expected that the Retail Offer will launch
today, 3 December 2024, shortly after this announcement and will be open for
applications up to 4.30 p.m. on 4 December 2024, or such later time and date
as the Company and Winterflood may agree. The result of the Retail Offer is
expected to be announced by the Company on or around 5 December 2024. For the
avoidance of doubt, the Retail Offer is in addition to the Subscription. There
can be no guarantee that the Retail Offer will be fully subscribed. The Retail
Offer is conditional upon completion of the Subscription.

5.    Admission

Application will be made to London Stock Exchange plc for the admission to
trading on AIM of the Subscription Shares and such number of Retail Offer
Shares as are subscribed for pursuant to the Retail Offer (Admission). It is
expected that Admission will become effective and dealings will commence at
8.00 a.m. on or around 9 December 2024.

 

The person responsible for arranging the release of this announcement on
behalf of the Company is Ed Hooper, Executive Director and General Counsel of
the Company.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE UK VERSION OF REGULATION (EU) NO 596/2014 WHICH IS PART OF UK LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. UPON THE
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

-ends-

 

 For more information, please contact:

 EMV Capital plc                                                             via Rosewood
 Ilian Iliev, CEO

 Panmure Liberum (UK) Limited (NOMAD and Broker)                             +44 (0)20 7886 2500
 Emma Earl / Will Goode / Freddy Crossley / Mark Rogers (Corporate Finance)
 Rupert Dearden (Corporate Broking)

 Rosewood (Financial PR)                                                     +44 (0)20 7653 8702
 John West / Llewellyn Angus / Lily Pearce

 

About EMV Capital plc (EMVC)

EMV Capital plc, formerly known as NetScientific plc, is a deep tech and life
sciences venture capital investment group with an international portfolio of
high-growth companies.

 

With a strategic focus on generating superior returns for investors from the
fast-growing sectors and technologies that will define our future; EMV Capital
invests in, manages and strengthens early stage IP-rich companies.

 

EMV Capital holds both direct equity stakes and carried interest in its
portfolio companies, creating an evergreen structure that supports extensive
growth and value creation. EMV Capital's investment thesis is realised through
these capital sources:

 

·      capital-efficient investments through Group balance sheet;

·      fund management of the Evergreen EIS and Martlet Capital Funds;

·      syndicated investments leveraging its network of third-party
investors.

 

EMV Capital's approach is characterised by its proactive management style,
aiming to advance portfolio companies to critical value inflection points by
actively engaging with them. Companies are supported through Board
representation and the use of its Value Creation Services practice.

 

Headquartered in London, with a Cambridge presence and strong international
links, EMV Capital is quoted on the AIM market of the London Stock Exchange.

 

www.emvcapital.com (http://www.emvcapital.com)

 

IMPORTANT NOTICES

Certain statements in this announcement are forward-looking statements with
respect to the Company's expectations, intentions and projections regarding
its future performance, strategic initiatives, anticipated events or trends
and other matters that are not historical facts and which are, by their
nature, inherently predictive, speculative and involve risks and uncertainty
because they relate to events and depend on circumstances that may or may not
occur in the future. All statements that address expectations or projections
about the future, including statements about operating performance, strategic
initiatives, objectives, market position, industry trends, general economic
conditions, expected expenditures, expected cost savings and financial
results, are forward-looking statements. Any statements contained in this
announcement that are not statements of historical fact are, or may be deemed
to be, forward‐looking statements. These forward-looking statements, which
may use words such as "aim", "anticipate", "believe", "could", "intend",
"estimate", "expect", "may", "plan", "project", "target" or words or terms of
similar meaning or the negative thereof, are not guarantees of future
performance and are subject to known and unknown risks and uncertainties.
There are a number of factors including, but not limited to, commercial,
operational, economic and financial factors, that could cause actual results,
financial condition, performance or achievements to differ materially from
those expressed or implied by these forward‐looking statements. Many of
these risks and uncertainties relate to factors that are beyond the Company's
ability to control or estimate precisely, such as changes in taxation or
fiscal policy, future market conditions, currency fluctuations, the behaviour
of other market participants, the actions of governments or governmental
regulators, or other risk factors, such as changes in the political, social
and regulatory framework in which the Company operates or in economic or
technological trends or conditions, including inflation, recession and
consumer confidence, on a global, regional or national basis. Given those
risks and uncertainties, readers are cautioned not to place undue reliance on
forward-looking statements. Forward-looking statements speak only as of the
date of this announcement. The Company expressly disclaims any obligation or
undertaking to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise unless required to do so
by applicable law or regulation.

EMV Capital Partners Limited, which is authorised and regulated in the United
Kingdom by the FCA, is acting as sole bookrunner to the Company in connection
with the Subscription and to no one else and will not be responsible to anyone
other than the Company for providing the protections afforded to its clients,
nor for providing advice in relation to the Subscription or any other matter
referred to in this announcement.

Neither EMV Capital Partners Limited or its affiliates, nor any of their
respective directors, officers, partners, employees, advisers, consultants
and/or agents, accepts any responsibility or liability whatsoever for or makes
any representation or warranty, express or implied, as to this announcement,
including the truth, accuracy or completeness of the information in this
announcement (or whether any information has been omitted from the
announcement) or for any loss howsoever arising from any use of the
announcement or its contents. EMV Capital Partners Limited, its affiliates and
their respective directors, officers, partners, employees, advisers,
consultants and/or agents, accordingly disclaim all and any liability whether
arising in tort, contract or otherwise which they might otherwise have in
respect of this announcement or its contents or otherwise arising in
connection therewith.

No statement in this announcement is intended to be a profit forecast or
estimate, and no statement in this announcement should be interpreted to mean
that earnings per share of the Company for the current or future financial
years would necessarily match or exceed the historical published earnings per
share of the Company.

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