Promising start for new Fintech fund

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Promising start for new Fintech fund
Master Investor Magazine 44 cover

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The London-listed investment company Augmentum Fintech (LON:AUGM) raised £94 million at its IPO in March and is making good progress towards building up a high quality portfolio of private Fintech businesses in the UK and Europe.

When it was admitted to the market it had a seed portfolio of five holdings with a value of £33.3 million already in place and since then it has added another five for a total consideration of £15 million. There are also several other new investments that are in the final stages of due diligence that will reduce the remaining cash pile of £43.9 million.

Despite the high cash weighting the fund has achieved creditable NAV growth of 5.1% over the period from the IPO on 13 March to 30 September. The shares have weakened slightly since the admission and are trading at a small discount to the NAV of 104p per share.

The most profitable holding was the peer-to-peer lending platform Zopa

The most profitable holding was the peer-to-peer lending platform Zopa, whose carrying value has been written up by £3.5 million. It has recently benefited from a successful £60 million funding round and is well on the way to launching its own bank.

Another major holding, Interactive Investor, has also made decent progress. The online broker has successfully integrated the acquisition of TD Direct and continues to trade well. It has recently announced its intention to purchase Alliance Trust Savings, which would take its total assets under administration to £35 billion and put it in clear second place behind Hargreaves Lansdown.

The other holdings in the initial seed portfolio are: BullionVault, the world’s largest physical gold and silver online market; Seedrs, a leading European marketplace for private investment in businesses; and SRL, which serves family offices with enterprise data management, portfolio reporting technology and operations support.

Over 350 new investment opportunities

In the last six months the managers have seen over 350 new investment opportunities and invested in five of them with the largest commitment being a £5.9 million stake in Monese, which provides banking services to people who work abroad and need a local bank account.

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Augmentum’s other new investments are: SME challenger bank Tide; Unmortgage, which targets people in the UK who can afford to rent, but who want to own through part ownership; Previse, which seeks to get suppliers paid faster for their goods and services; and Duedil, a company that provides access to information on businesses that helps both prospecting and on-boarding.

The fund intends to realise value through exits – typically either by selling its stake to another investor or by waiting until the company floats on the stock market − and is committing to return up to 50% of the gains on disposal, annually, through tender offers or special dividends. It will also return cash that is not expected to be substantially deployed within 12-18 months.

These are early days for Augmentum Fintech, but it is an interesting proposition with a unique mandate amongst investment companies. The fund has an experienced management team and some fantastic holdings with loads of potential. It could be one for long-term, risk tolerant investors to tuck away.

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