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Augmentum Fintech Plc - Portfolio Update

·10-min read

26 October 2020

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LEI: 213800OTQ44T555I8S71

Augmentum Fintech plc

(the “Company” or “Augmentum Fintech”)

Period-end Portfolio Update

Portfolio overall has seen strong operational performance in volatile times

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

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

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

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

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

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

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

Tide (10.5% of NAV)

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

BullionVault (8.2% of NAV)

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

Onfido (8.0% of NAV)

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

Monese (7.5% of NAV)

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

Zopa (5.8% of NAV)

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

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

iwoca (5.6% of NAV)

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

ReceiptBank (5.5% of NAV)

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

Farewill (5.3% of NAV)

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

Grover (4.6% of NAV)

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

Habito (3.7% of NAV)

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

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

End

For further information, please contact:

Augmentum
Tim Levene, Portfolio Manager
Nigel Szembel, Investor Relations


+44 (0)20 3961 5420
+44 (0)7802 362088
nigel@augmentum.vc

Peel Hunt LLP
Liz Yong, Luke Simpson, Tom Pocock (Investment Banking)

+44 (0)20 7418 8900

Nplus1 Singer Capital Markets Limited
Harry Gooden, Robert Peel, James Moat (Investment Banking)

+44 (0)20 7496 3000

Frostrow
Victoria Hale, Company Secretary

+44 (0)20 3170 8732
info@frostrow.com

Notes to Editors

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