Augmentum Fint. Share Chat (AUGM)

Same post from me today having hopefully got the date right now...

Was anyone at the meetings this morning? Was the GM adjourned if the Court meeting didn't sanction? We'll presumably hear later today.

Atm I guess from the unmoved SP that both meetings went ahead and approved the combination. Anyone know?

Whoops sorry day early🤦

How did this morning's meetings go?! Can't find anything on the Internet. SP hasn't budged, so can we infer court sanction and a shareholder yes vote?

Well I've sold out ahead of the meetings this week. Cue the massive counteroffer lol..!

Seems to me that with no counteroffer so far (suggesting the deal and the bod's reasoning stands up), and some chance of a no vote, it's best to sell now. Maybe buy back in if the SP tanks on a no vote. I averaged a bit over 108pps selling, so an extra 2 or 3p or so at 111pps in a few months time on combination on a yes vote is neither here nor there. Seems to me the market's pretty confident of a yes vote.

Potential last thought from me on this share is to express overwhelming disappointment at being invested here for over 7 years for a pitiful return, in what should have been an exciting lucrative investment with great investee companies in the important emerging fintech sector.

Yep, I posted something very similar on advfn after scanning recent RNSs. A few instis seem to be accumulating, no doubt to vote Aye to the offer.

Guessing those in charge of AUGM knew that would happen so that basically certain companies and themselves all make money at our expense.

Me being cynical about how cynical it all seems.

Guess but April perhaps after Easter hols maybe? GM (for vote) is shortly after the Scheme Doc is published. Scheme expected to be effective in Q2. Long stop August.

The Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and the General Meeting will be published as soon as reasonably practicable, and, in any event, within 28 days of this announcement (or such later time as BidCo, Augmentum and the Panel agree).

I suppose that at least the parasitic offer protects us from any downside here. At least until it's voted down by a considerable majority. Anyone estimate when that happy day might be?

Verdane are offering 111p. The only reason that they are offering this is because they think AUGM is worth more. Given the currently volatile situation, of which they are well aware, they are not looking at a valuation that is a couple of pence more. They are looking at a very comfortable margin to cover their (AI related and geopolitical) risk. They will have undertaken their own valuation and come to the conclusion that at 111p they will make a very handsome profit - maybe not immediately, but in the foreseeable and not too far distant future. Personally, I would be inclined to put more trust in any such longer term assessment than any short term valuation that might be produced by agentic AI, or any other number cruncher. We clearly do not know the number that Verdane has arrived at but I think we can be confident that it is tens of percent more than 111p. I intend to sit tight and graciously decline their kind offer.

It'll be interesting to see what the independent valuation of the portfolio to be included in the Scheme Document will show.

Time will tell, but I suspect it'll be little changed from the most recent NAV of 159.50, which would basically mean we'd be selling at a 30% undervalue. I believe the directors should have revealed yesterday what valuation they were working to when recommending the offer. They had to have had one. I'm unimpressed they chose not to share.

What support will the offer get amongst IIs and PIs I wonder? It's a no from me atm.

To my mind, it'll be about whether the directors' reasoning makes sense to investors in the light of this upcoming updated valuation. Ie is low liquidity, difficulty raising capital whilst listed etc reason enough to accept a potentially very significant hit.

What a disappointing position to be in. Fintech's an exciting sector with massive potential. Good investee companies here imo, whatever view people have of the BoD. Just no real interest from the market in AUGM whilst publicly listed.

We agree then? the board need to explain why 111p is in our best interest.

GreenEyes1. You state "The board must see a big weakness down the line otherwise why accept such a low offer. (sic)". You also state "I was looking at a few of the top holdings recently and they seem to be flying,..." If the second statement were correct, it would seem unlikely that a problem with one investment company could cause a 'big weakness' in the portfolio as a whole. This being the case, there would need to be problems with several of the investments, for which there appears to be no known evidence, or a more widespread 'market-wide' problem to cause any such weakness. There is some evidence of market-wide concerns relating to geopolitical issues, tariff instability, AI bubble concerns and over-extended borrowing by governments, but it is unclear (to me at least) whether the Board of Directors of Augmentum would accept a low bid based on such concerns. I would be interested to hear the views of others on this subject.

I think shareholders deserve a Q3 factsheet, not publishing one feels like they are hiding good news. AI will only be able to work out a NAV based on publicly available date - which will be why Grok has come up with a similar figure. Not that I would expect a big jump but it might show growth which would be positive, especially as the offer is so low. The offer does not seem reasonable at all, effectively buying a £100m profit without any benefit of future growth factored in (they wouldn't be interested if they couldn't see growth).

Groks workings out of Augmentum's NAV to date. Falls in ling with last NAV released by them. https://grok.com/share/c2hhcmQtMg_ff45f9d2-fbd0-4fe6-8232-9ab76cad0ef3

The recent surge in precious metal prices should be materially boosting BullionVault’s revenues, given that most charges and fees are levied as a percentage of client account values. As a long-term investor, AUG should therefore be benefiting from this operating leverage. That said, I do still wonder what the ultimate exit strategy is for BV within the AUG portfolio. In the meantime, it’s encouraging that the investment is dividend-paying, which helps offset a portion of AUG’s ongoing management fees, and hopefully we’ll see a further valuation uplift reflected at the next results.

Buy recommendation from Simon Thompson today. Here is the conclusion of the article:

“ Unwarranted deep discount to book value

Augmentum’s investment performance would have been better but for a £5mn markdown on its fifth-largest holding, Volt, a provider of account-to-account payments connectivity for merchants and payment service providers. Volt has been refining its business model and now processes 90 per cent of traffic through its own ‘rails’, and has improved margins and reduced third-party dependency. The pipeline remains promising, too. However, despite encouraging initiatives, growth fell short of expectations, hence the 25 per cent markdown in the holding’s valuation to £15mn. That said, the investment is still showing a positive return on the £9.8mn the fund has invested across three funding rounds in the past five years.

Although investors have been cautious about Augmentum’s shares due the challenging exit market for fintech companies, there are clear signs that the IPO market is starting to thaw. That is important as it offers scope for the fund to make realisations from its mature holdings and provide a catalyst to narrow the 49 per cent share price discount to NAV. Augmentum has generated an impressive 31 per cent average internal rate of return on exits.

Furthermore, with Augmentum’s market capitalisation of £137mn fully backed by its four largest holdings (Tide, Zopa, Iwoca and BullionVault), shareholders are getting cash of £22.4mn thrown in for free as well as holdings in 23 other investments.

So, although the shares are below the 102p entry point in my 2019 Bargain Shares Portfolio, it’s worth bottom fishing ahead of an uptick in corporate activity, which could improve investor sentiment no end. Buy.”

Looks like the only people making money out of this company are AFML with huge performance fees while NAV and SP drop, not much performance to me. Slow winddown looks like the best option returning money to shareholders but that depends on the NAV being quoted is realistic.

Buy in the 80s, sell when it crawls over 100p. Slow process but usually works fine.

Yet no bad news. I can't say the same for other growth capital. Seller in the market?

Hi, Has anybody else (tried to) read the above. I have waded through and what I take from it isthat is a way that Levene and Mathews (and no doubt some other happy free loaders) can pay themself twice for the same job while creatively broadening other ways that they can reward themselves. Or am I wrong?

Steph posted this link on the GROW page, but it also refers to AUGM so I am pasting it here with thanks to her.

https://www.theaic.co.uk/aic/news/industry-news/killiks-gilligan-the-market-is-being-myopic-on-growth-capital-trusts

Good to see that Zopa have started advertising their new current account and allowing people to sign up. Looks like an attractive product but you can’t set it up using the current account switching service so it’s seems like a lot of effort on behalf of the customer to switch.

A report on Sky Business is suggesting a major fundraiser by our largest investment Tide:

“ Tide, the business banking services platform, has hired advisers to orchestrate a fresh share sale as it pursues rapid growth in the UK and overseas.

Sky News understands that Tide has been holding talks with investment banks including Morgan Stanley about launching a primary fundraising worth in excess of £50m in the coming months.

The share sale may include both issuing new stock and enabling existing investors to participate by offloading part of their holdings, according to insiders.

It was unclear at what valuation any new funding would be raised.

Tide was founded in 2015 by George Bevis and Errol Damelin, before launching two years later.

It describes itself as the leading business financial platform in the UK, offering business accounts and related banking services.

It now boasts a roughly 11% market share in Britain, along with 400,000 SMEs in India.

Tide, which employs about 2,000 people, also launched in Germany last May.“

Hmmm, Jurys out I am afraid, maybe to focused.

Herald Investment Trust up 17.7% since Aug 22, whereas Augmentum is still paralysed around 100p since Aug 22.

Hold both albeit five times as much in Herald - lets see where we go in the next few months with 3 years my limit.

Here is s summary of what he writes:

"This fintech fund is a stand-out buy"

"Proforma cash backs up 30 per cent of the £162mn market cap"

"Seventh portfolio company exit, all .....at or above the last published valuation"

"Exit price (of last exit, FullCircl) represents a 75 per cent increase on the company's last published valuation"

"(NAV, after this exit) implying the shares in the £162m market capitalisation (of Augmentum) are trading on a massive 42.5 per cent discount to book value"

"top 10 holdings, which represent 81 per cent of the total portfolio valuation, reported average annualised revenue growth (of) per cent earlier this year and are cash generative (five positions) or have an average of 20 months cash runway."

"They are well worth buying ahead of the forthcoming results. Buy"

Looks like another exit for Augmentum sadly this time at what looks like a price that will wipe all value of the stake. Amazing that it’s gone from £10m stake valued in the September 2023 to nothing. Also, interesting that Augmentum haven’t put out an RNS related to the acquisition.

Maybe Tencent were getting impatient on an IPO and realising any value in their investment.

https://thepaypers.com/online-mobile-banking/tencent-offloads-stake-in-british-challenger-bank-tide--1269598

Just watched an excellent presentation by the CEO which will soon be available on the website and Investor Meet. Well worth watching. Others clearly liked it as Up 3.45% at 120p which is a new 52 week high.

Neil England, Chairman of Augmentum Fintech plc commented:

“The Company’s NAV per share after performance fee at 31 March 2024 was 167.4p, up 5.4% from 31 March 2023. This continued our history of increases for every reporting period since the Company’s IPO in 2018.”

“The UK equity market has been largely out of favour and investment company discounts are running at historic highs in many cases. However, UK inflation numbers are improving, and history suggests that growth companies such as Augmentum will be early beneficiaries of any rally inspired by declining rates.”

“We maintained our investment discipline over the last year and, with our strong cash reserves (£44.8 million as at 31 May 2024), we are well placed both to take advantage of new opportunities and to reinforce our appeal as a supportive investor. We have a healthy pipeline of opportunities under consideration.”

Tim Levene, CEO of Augmentum Fintech Management Limited commented:

“Several portfolio companies have posted meaningful profits this year and have attracted substantial growth capital of over £150 million during the period. The operational performance of the vast majority of the companies in the portfolio has continued to be strong, with an average revenue growth of 65% across the top 10 holdings in the last 12 months. There have been some standout results, in some cases ahead of expectations, and the majority of our companies have over two years of cash runway.”

"Fintech’s market share of global financial services revenue remains below 5% but is set to more than double during the next decade as fintech companies both disrupt incumbent firms and become their partners for delivering digital transformation and harnessing the potential of new technologies. Hundreds of valuable companies will be built in Europe to support this change. In our view, the European early stage fintech ecosystem has reached an exciting point of maturity.”

“This year, we have crossed several important milestones; six years since IPO, six exits delivered to the Company and the first portfolio position rising above a fair value of £50 million.”

There is no need for news to warrant a rise. The information is already available to show AUGM trades on a large discount to its NAV that is completely unwarranted. Perhaps in advance of the Capital Markets Day the market is starting to realise the va7here.

BUT no news to warrant it.

Could it be rising simply because it's a good investment?!

Up 9% at the moment.

Augmentum Fintech plc

Portfolio Company Onfido Acquired by Entrust

Augmentum Fintech plc (LSE: AUGM) (the “Company”), Europe’s leading publicly listed fintech fund, notes the announcement by Entrust that they have completed their acquisition of Onfido, a portfolio investment of the Company.

Augmentum’s understanding of the terms of the transaction implies a valuation of the Company’s investment in Onfido at £10.1 million (30 September 2023: £9.7 million representing 3.6% of the value of the portfolio).

The Company initially invested in Onfido the AI-powered digital identity verification business in March 2018 with a £4.0 million investment as part of a US$50 million funding round, with a further £3.7 million in December 2019. This exit will represent a multiple of 1.3x cost and an IRR of 6%.

The sale to Entrust, a global leader in identity, payments, and data security solutions, is Augmentum’s sixth exit, each of which has been at or above the Company’s holding value.“

There is an article in this weeks IC on which Investment Trusts are banking on set to benefit from am increase in IPO’s, which mentions AUGM:

“ Other trusts could also stand to benefit. Mick Gilligan, head of managed portfolio services at Killik & Co, pointed to Zopa, the online bank expected to IPO in the near future, and an 11.6 per cent position in Augmentum Fintech (AUGM).

Topped up and bought my average down , but its like trying to hold smoke, it just keeps slipping!

Looks like another successful exit for AUG from Onfido at a nice premium to stated value in previous results. Hopefully this will start to close the discount as even more of the NAV will be backed up with cash.

NEW FEATURE: Diving into Augmentum Fintech's latest triumphs: £22.8M from NatWest's Cushon buyout, strategic boosts to Volt & Grover, and a disciplined approach that's shaping the future of fintech.

https://smallcompanychampion.substack.com

https://twitter.com/LEMMINGINVESTOR

Part 3

Analysts Gavin Trodd and Ewan Lovett-Turner at Numis Securities like what they view as a small but unique investment company with above average charges.

They said: “We believe that the fund may be an attractive long-term investment, albeit that the early-stage nature of the companies means that it may not always be a smooth ride for investors.”

Questor says: buy

Ticker: AUGM

Share price at close: 100p

Part 2

Questor first tipped Augmentum in January 2019 at 98.4p, then again at 117.5p in March 2022 and most recently at 109.3p in August last year. If we had foreseen how bad the slump would be we would have been better in selling 20 months ago. We didn’t and, at the risk of sounding like a broken record, the shares still look highly attractive on a 38pc discount to asset value.

Having held on for so long, it would be wrong to abandon Augmentum when its investments are bearing fruit. While the shares have gone back to square one, most of the companies it invests in have progressed well. The top 10 holdings accounting for 82pc of assets grew revenues by an average of 74% in the year to September, according to the company.

Under chief executive Tim Levene, Augmentum has made five profitable exits from investments since launch, most notably the sale of broker Interactive Investor last year to fund management group Abrdn from which it netted £42.8m. During the latest half-year, it garnered a further £22.8m from the sale of zero carbon workplace pension provider Cushion to NatWest bank, a deal on which it made 2.1 times its original investment.

That transaction took the total figure Augmentum has raised so far in sales that have achieved an average 30pc mark-up for shareholders to £84m. It also confirms how desirable Augmentum’s fintech start-ups are to big financial institutions as they seek to modernise their businesses, adapt to new technologies like artificial intelligence and cut costs.

Augmentum has used its cash windfalls wisely, making £6.9m of follow-on investments in Volt, the account-to-account payment provider, Habibo, a digital mortgage broker, and Berlin-based Grover.

That support to portfolio companies has been balanced with buying back £4.2m of shares in a bid to narrow the wide discount but also to lock in a gain for shareholders from repurchasing cheap stock.

While the company is unable to raise more money from issuing shares while trading on a discount, it is confident that with an average of 29 months of funds, its top companies have what they need to achieve profitability. Tide, the biggest holding at 15.2pc of assets, is already profitable in the UK and is expanding rapidly in India.

Mr Levene believes markets are showing early signs of a recovery with interest rates held steady in the UK and the US.

“This signals a cautious yet hopeful economic outlook,” he told shareholders.

“This, combined with the continual move towards the digitisation of financial services and Augmentum’s disciplined approach to both investment and valuation will, we believe, offer exceptional opportunities for us.”

Good article in Telegraph

https://www.telegraph.co.uk/money/investing/keep-faith-augmentum-fintech-venture-capitalist-rate-rally/#:~:text=Shareholders%20who%20backed%20the%20launch,off%20a%20three%2Dyear%20low.

Part 1

Keep faith with a prudent venture capitalist rallying on rate hopes

Questor share tip: Augmentum's disciplined investing positions it well for future growth

Gavin Lumsden14 December 2023 • 6:00am

Shareholders who backed the launch of Augmentum Fintech in 2018 have had a frustrating time. But now is not the time to give up on this venture capital investor in challenger banks and financial services disrupters, with shares in the investment trust bouncing off a three-year low.

Since the end of October, Augmentum shares have rallied 25pc, buoyed by hopes that interest rate rises, that have crushed valuations of early-stage companies in the past two years, may have peaked and could be cut in 2024.

Half-year results in early November demonstrated how over-sold the £278m portfolio of unquoted businesses had become. With the shares slumping from a September 2021 peak of 173p to 79p over two years later, Augmentum’s market capitalisation had fallen below the total of its £51.8m of cash and its top three holdings: in small business lender Tide, technology subscription platform Grover and online bank Zopa.

This ignored £125m in the fund’s 21 other investments – a ludicrous situation, given Augmentum’s record in refusing to pay hyped-up valuations for technology companies at the top of the market in 2021, thus avoiding the big write downs suffered by other growth capital funds.

In the six months to September, the value of its investments held steady, edging 0.8pc higher.

The rebound has lifted Augmentum’s market value to £173m, but at 98.7p the shares today are effectively back where they started at the trust’s flotation in March 2018.

That’s despite the underlying net asset value (NAV) per share growing to 160.2p at Sept 30. In other words, shareholders who bought in at the initial public offer (IPO) have seen no growth in their investment despite the portfolio generating a total return of about 60pc.

Tipped by ST in the IC this morning

That’s the theory but in practice rarely leads to better share price performance.

Better use of the ££ as dividends would push the share price more effectively.

Schwee

You are correct if the company has to borrow to fund buy backs. Borrowing has a cost that's true. But you're presumably making some sort of sweeping statement here, or otherwise you clearly don't understand AUGM as there are no borrowings. Some minor lease liabilities of sub >£0.5m if you are picky.

Idle cash has an opportunity cost too. Cash returned to shareholders via buy backs improves the share of assets so is largeness - not largesse - in AUGM's case.

You also don't appear to understand AUGM's incentive policy either - they don't get rewarded based on simple NAV accretion, which again is a way other companies' management can game the system. Sweeping statement - doesn't apply here.

If buybacks increase the NAV per share, one wonders why equity capital is needed at all. The answer is that it is only a short term sugar rush as the borrowings to finance this largesse will over time cost more than they would have done had the buyback not occurred in the first place. But of course the management would have moved on by then, leaving their successors to pick up the pieces.

Tapman you’ve misunderstood.

Imagine you own a time share that you can use once every 100 weeks and then there’s a buy back and now you can use the time share every 85 weeks. Your share in that timeshare has gone up.

Buy backs increase the Nav per share so are usually positive

Perhaps I am (hopefully) getting this wrong, but is the subtext "we get more, so you get less"? only askin as a PI! DOH

Good to see AUGM Number 15 on the Leaderboard Up 8.52% at 90.82p on the back of today’s interim report although it has just fallen back to 88p:

“ Financial highlights

• NAV per share after performance fee1 increased by 0.8% to 160.2p (31 March 2023: 158.9p).

• IRR of 16.6%2 on invested capital since inception (31 March 2023: 18.5%)

• Available cash at period end of £51.8 million (free cash of £48.0 million) with no debt (31 March 2023: £38.5 million).

• Repurchased 3,918,878 shares over the period, at an average price of 99.2p per share.”

This share price of 90p is totally ridiculous against an NAV per share of 160p of which £51.8 million is in cash. The assets are performing well:

“ The top 10 holdings, which represent 82% of portfolio value, grew revenue at an average of 74%3 YoY and have an average of 29 months cash runway. 4 of the top 10 positions are cash generative.

• The sum value of the top three holdings in Tide, Grover, and Zopa, plus current cash, is above the Company’s market capitalisation. These positions continue to demonstrate their credentials as fintech market leaders, growing revenues by an average of over 1,200% since the Company’s investment and are either profitable or capitalised until projected profitability.”

This is due a large rerate and I am looking forward to the Investor presentation on Thursday.

Added more on today's drop, got my full position back. It's crazy how undervalued this is now.

Bought back at 90p… quite surprised it dropped back down despite the fundamentals havent changed since 6 months ago