A closer look at the results from Augmentum Fintech’s maiden interim report
On 26 November 2018, Augmentum Fintech* (AUGM) presented its maiden interim report for the period from 19 December 2017 (inception) to 30 September 2018. The results were very positive with a NAV uplift compared to the IPO NAV of 5.1% putting the share price discount to NAV at 4.7%. The company is still in its initial phase, deploying cash from the IPO, but this first set of results looks very promising.
Most importantly, the seed portfolio of investments (Zopa, Seedrs, Interactive Investor, SRL Global and BullionVault) managed to achieve an annualised IRR of 30%, significantly above the long-term target IRR of 20%. The main drivers for this high IRR in the period to the end of September 2018 were the financing round undertaken by Zopa, which provided an uplift on the valuation of the existing stake of £3.5m. Additionally, the holding in Interactive Investor provided an investment return of £1.5m with a small additional investment of £0.2m.
The company management also deployed £15m cash in five new investments during the period:
European challenger bank Monese (stake valued at £5.9m);
SME bank Tide (stake valued at £3m);
Instant payment services provider Previse (stake valued at £2m);
Information provider DueDil (stake valued at £2m);
Startup rent-to-own specialist Unmortgage (stake valued at £2.5m).
After these investments, the company is about 55% invested. AUGM holds £43.9m in cash and is on track to fully invest the portfolio by mid-2019. The company management has a promising pipeline with a total valuation of £260m from which to pick additional investments in the coming months.
In our view, the existing portfolio of investments is of high quality and has significant long-term upside potential. The results for the first six months following the IPO show that the management team is able to deliver high rates of return that translate into significant NAV upside in the short-term. Despite the relatively high cash holdings for the portfolio at the moment, a 5% uplift on the net asset value of the total portfolio translates into a 10% uplift on the invested part of the portfolio in just six months.
New investments in the coming period are capable of providing a significant increase in return prospects for the overall portfolio and could trigger a revaluation of the share price towards the net asset value.
To read the full report click here.
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