REG - Literacy Capital PLC - Literacy Capital announces sale and reinvestment

Literacy CapitalAnnouncement

Mon 07:00

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RNS Number : 6984S  Literacy Capital PLC  28 July 2025

The information contained in this announcement is restricted and is not for
publication, release or distribution in the United States of America, any
member state of the European Economic Area, Canada, Australia, Japan or the
Republic of South Africa.

 

This announcement contains inside information.

 

28 July 2025

 

Literacy Capital plc ("Literacy Capital", "BOOK" or the "Fund")

 

Literacy Capital completes transaction to sell and re-invest into Velociti
Solutions alongside CBPE, at a significant premium to carrying value

 

Transaction highlights

 

·    Transaction involving BOOK's second largest holding (11.0% of NAV) at
a 52% premium to latest carrying value

·    Total return of 14.8x MoM (IRR of 70%) for Literacy Capital's
shareholders

·    Significant proportion of proceeds being re-invested alongside CBPE,
with Velociti remaining a top three holding by value

·    Cash proceeds will predominantly be used to repay the RCF

·    Current intention to return no less than £6m of capital to
shareholders before the year end

 

Literacy Capital is pleased to announce the completion of a transaction
involving its portfolio company, Velociti Solutions ("Velociti"). Velociti is
a software provider to the bus and rail sectors in the UK and internationally.

 

EPM Solutions was the platform business originally acquired to create the
group in February 2020, almost five and a half years ago. A further three
small acquisitions were subsequently completed before the business was
rebranded as Velociti last year.

 

As at 31 March 2025 (the date of BOOK's most recent published NAV), Velociti
was Literacy Capital's second largest holding. Its carrying value was £33.8
million (equating to 11.0% of NAV) at the end of Q1.

 

This transaction values Literacy Capital's stake in Velociti at £51.4 million
(after all transaction related costs), a 52.0% premium to the most recently
stated carrying value in the Q1 2025 factsheet.

 

Literacy Capital is pleased that Velociti has performed very strongly for the
Fund, with the value achieved from this transaction being approximately 100%
(2.0x) greater than the carrying value as at 31 December 2024.

 

The total value of cash consideration and amounts re-invested total £51.4
million, with no carried interest or performance fees payable by Literacy
Capital. The total return for BOOK shareholders from this investment,
including cash distributions previously received and amounts reinvested, is
14.8x MoM (IRR of 70.0%), before future uplifts.

 

This transaction announced today involves CBPE and is the first investment
from their £714m fund raised earlier this year. Literacy Capital will retain
a significant minority stake alongside CBPE, as a result of its re-investment.
Velociti at completion of this transaction will remain the Fund's third
largest holding by value, allowing it to benefit from the continued growth of
the business.

 

The cash received by BOOK following completion will be used to repay amounts
drawn under its Revolving Credit Facility. The Fund expects to receive
additional, smaller amounts of cash from the refinancing of two other
portfolio companies before the end of Q3. Following these events, the current
intention is a return of capital to all shareholders of no less than £6
million, currently equivalent to approximately 10 pence per share, using the B
Share Scheme before the end of 2025.

 

Richard Pindar, CEO of BOOK's Investment Manager, commented:

 

"Velociti has been an extremely successful investment for Literacy Capital and
has generated a significant premium to carrying value, so we are really
pleased to announce this transaction today.

 

The leadership team, led by Jeff Hewitt and Carly Wilson, deserve considerable
credit for the significant progress Velociti has made and the exceptionally
strong performance of the business since they joined.

 

The journey with Velociti over the past five and a half years actively
demonstrates how Literacy Capital supports businesses to add significant
value. With a degree of patience, BOOK's shareholders have benefitted from
very strong returns as a collection of small, founder-owned businesses have
been developed into an enlarged software group with excellent management,
making it highly sought after by larger private equity investors. Once again,
a significant premium to previously reported carrying value has been achieved
on a sale to private equity.

 

We look forward to remaining on this journey, with the Velociti team and CBPE,
and continuing to provide our support during the next few years."

 

Notes

 

This announcement does not constitute or describe an updated NAV for the
Company. Shareholders should take note that the calculation of the NAV per
share as at 30 June 2025 will take account of the latest valuations of all the
Company's investments as at this date.

 

Given the timing of completion of this transaction, the publication of the Q2
2025 factsheet and update to NAV will be delayed by 24 hours and take place
tomorrow (Tuesday 29 July) at 7am.

 

Enquiries

For further information, please contact:

 

 Literacy Capital plc / Book Asset Management LLP:  +44 (0) 20 3960 0280

 Richard Pindar / Aasha Tailor

 MHP Group:                                         +44 (0) 7817 458804

 Reg Hoare / Ollie Hoare / Matthew Taylor           book@mhpgroup.com (mailto:book@mhpgroup.com)

 Singer Capital Markets Securities Limited:         +44 (0) 20 7496 3000

 Alaina Wong

 

About Literacy Capital:

 

Literacy Capital (BOOK.L) is an investment trust that was co-founded by Paul
Pindar and Richard Pindar in 2017 with £54 million of capital. Literacy
subsequently listed on the London Stock Exchange in June 2021. The Fund
focuses on opportunities to invest for the long-term in growing private
businesses where a clear route to creating additional value can be seen with
its support. The fund structure is evergreen, allowing it to be more flexible
and to accommodate the wishes or needs of founders.

 

It also has a unique charitable objective, to donate 0.5% of annual NAV to
charities focused on improving UK literacy in children. £11.6 million has
been donated or reserved for donation to charities since the trust's creation
in 2017.  For more information, please visit our website:
www.literacycapital.com
(https://protect.checkpoint.com/v2/___http:/www.literacycapital.com___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzowNGJmYTYxZGIxMTNhZmFhMTU5MzYyMGE2ZGIxNjlmNTo2OjkzMDc6OTVmMmE3MGRjNmU3MzM5NTJjNjYyZDY2NjllZGI5YjMwNTExZjZhNGQ1YTJiZjI3ZmEzYWUzYWZhZDhhMWY3MDpwOkY6Tg)
.

 

Website:

www.literacycapital.com
(https://protect.checkpoint.com/v2/___http:/www.literacycapital.com___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzowNGJmYTYxZGIxMTNhZmFhMTU5MzYyMGE2ZGIxNjlmNTo2OjkzMDc6OTVmMmE3MGRjNmU3MzM5NTJjNjYyZDY2NjllZGI5YjMwNTExZjZhNGQ1YTJiZjI3ZmEzYWUzYWZhZDhhMWY3MDpwOkY6Tg)

 

LEI: 2549006P3DFN5HLFGR54

 

A copy of this announcement will be available on the Fund's website
at www.literacycapital.com
(https://protect.checkpoint.com/v2/___http:/www.literacycapital.com___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzowNGJmYTYxZGIxMTNhZmFhMTU5MzYyMGE2ZGIxNjlmNTo2OjkzMDc6OTVmMmE3MGRjNmU3MzM5NTJjNjYyZDY2NjllZGI5YjMwNTExZjZhNGQ1YTJiZjI3ZmEzYWUzYWZhZDhhMWY3MDpwOkY6Tg)
.

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