Member Info for phenomenonnick

The very same.

I would be surprised if they needed to raise anytime soon, given not only the cash that will come in from the warrants over the next 18 months, but also the structure of SVV. Unlike most funds, realisations get returned to their holders. So a sale by SVV generates cash for Pires not SVV.

That said, I lost my fear of a placing when they did the last one at a discount and the price soared. Pires could get themselves into a ‘virtuous circle’ where they raise at the current price, price goes up, they raise again at the new price; and so on. All the while making smart investments.

Will be interesting to see anyway!

Hi Techtonic,

I assume you won't mind someone else having a go at answering that question - albeit I'm going to answer with a swerve, but I hope useful nevertheless. I have been a shareholder since 2016, and having added last year and this I am the third largest investor after Riverfort and Chris Akers. I have an unhealthy proportion of my pension invested here! So I'm very interested in the question of what Pires is worth. I don't think it's easy to answer.

Let's start with the latest published data. Net assets at 30 April 2020 were £3.1m, which is 2.6p per share based on 119m shares. At the current share price, it's sensible to adjust for exercise of the warrants. These bring in just over £2m by issuing 53m shares at 4p per share. Adjusting for those we have net assets of £5.1m, or 3.0p per share. This includes plenty of cash to meet our commitments to follow-on funding in SVV.

The challenge we have is that SVV's portfolio is making progress at such a pace that historic valuations are going to massively underestimate the value of the portfolio. The published net assets at 30 April are based on the last published asset value for SVV, which is based on the last supportable valuation of each portfolio company. For many that will be way, way out of date - it's only going to get uprated when there's a follow-on funding round or a sale. (Apart from VRE which is quoted). We know that Buymie did a fundraising in April and by June the valuation was up 200%. We know many of these firms have huge potential, possibly unicorn potential. Warducks is my personal favourite, their new game could be transformative. Admix is a rival to Bidstack and arguably able to grow in a more focused manner without the glare of being publicly listed. The portfolio is really well placed for thriving during and post covid.

In short, the current price of double the historic asset value seems to be likely to be a modest underrepresentation of where the likely value is right now. But this isn't a stock for focusing on "right now", it's about where it's likely to get to as these great investments continue to make progress.

It's worth noting that an additional broker was appointed in mid July. We've heard nothing from them so far, but we know from the RNS they were mandanted to prepare a research note. Other small investors have told me they understand this is imminent - certainly during September. This would give a more informed view as to the underlying value.

Additionally, Chris Akers is a seasoned tech investor who has seen something here. He has quite the following and has the contacts to add value to Pires over and above the SVV element. This to me gives grounds to add a further uplift to the valuation, over and above the underlying value of our stake in SVV, or the value of SURE which is the other quoted route to get exposure to SVV.

So - I don't have a crystal ball but I'm confident in the long term here. I'm eagerly awaiting the research note!

The placing raised a million and increased shares in issue by about 10%. The share price has fallen 25% in a week. It does seem odd that the company’s market value is now about 15% lower than it was, even though the business has an extra £1m to progress the project.

Wolves don’t forget the old holders have BIXX shares and Vela Special Shares worth 0.032p+ as well. So it isn’t a big drop for historic holders. Meanwhile VELA is cashed up and under new management.

I guess the question of a fundraising depends on how quickly SVV needs its investors to meet their commitments for further funding. The warrants issued a couple of months ago are in the money, so we should see £1m trickling in over the next 18 months or so. Plus the cash pile at the moment, and remember any further exits by SVV is cash being returned to Pires. So if we do need a fundraising it'll be for something exciting.

Olderandwiser - it’s a small pension scheme.

QuantumStar you're very wrong on what a reverse takeover is! In a strict sense, it's when Company A makes an acquisition of company B, and company B is larger than company A. "Larger" under AIM rules means any one of having a larger profit, larger gross profit, larger turnover, larger gross assets, or that the consideration paid is more than the previous value of company A.

More simply, what it means in practice, normally, is that company A buys the shares of company B, but pays primarily using shares in company A, and issues so many shares that the people who used to own company B end up owning more of company A than the previous owners of company A did, who now own a minority. The management of company B usually end up running company A, with company B now being a wholly owned subsidiary of company A.

It's a way of floating company B by making use of a previously listed shell, instead of floating B directly. It's usually not much cheaper than listing directly (though the myth persists that it is) but there's more certainty of getting a deal done as (usually) there's a pile of cash in company A so you don't have to risk running up lots of fees only to find the market turns against you and the broker can't raise the funds.

That's it then. So long Energiser, let's see what you can do in your new incarnation. Over to the Drumz board we go...

Well done Turtlewax. IMO the problem from the outset here was the major shareholder ran his mouth off to the Sunday papers forcing a suspension earlier than would have been the case if he’d kept mum. The board thus lost a load of the “behind the scenes” time, creating a timescale that was already tight pre Coronavirus. If the deal is still going through I would hope our major shareholder has the decency to have revised the terms so that the outside shareholders get a reasonable uplift when trading resumes, by way of apology. If not, I suspect the board may want to wait further until the effects of Coronavirus on trade are clearer, I assume a Leisure venue has been closed for most of the period and short term operating profits are likely to be non existent. Alternatively I guess the board could abort and the shares resume trading. Hopefully the major shareholder will be covering our due diligence costs if this is the case.

The shares are being issued at 0.08p, so the board have no incentive to keep the price low, quite the reverse.

Yes shocking behaviour. Issuing shares at 7p then a few months later taking it private at 6p when nothing appears to have gone wrong. If the argument is they want to raise many tens of millions and can only do that with private backers, those backers should make a conventional takeover bid, and if they're injecting many tens of millions they can find an extra couple of million to pay a fair price, say the average of the past 12 months. What on earth are the Nomad and independent non-execs playing at?

I bought a few here recently at slightly higher prices as it looks interesting. I take the point about sub scale businesses needing to focus on growth and therefore generally dividends being a poor idea. But in this case the valuation suggests the broader market is somewhat sceptical of this stock and its claims around money making. That scepticism would surely diminish significantly if they paid a decent dividend and grew it year on year.

This is going to get interesting by next month - new shares issued on 1 July, following which this is back to being a technology investment company, with cash and quoted assets worth the share price. Could be another AAA!

Really? I don't have a big position here but the £187m sale in Feb wiped out all debt. This £37m sale is pretty minor by comparison. I'm guessing Kingspan tried taking advantage of market conditions to cut the price, and got told no, presumably on the grounds they'd sooner hang on than accept the revised price, whatever it was.

Well maybe I need a more sophisticated broker, but MY placing shares definitely haven't been forward sold. They've been showing in my account for a couple of days but they won't be tradeable until some point tomorrow, usually not first thing. Been in this before and done well, I'd be amazed if it closes higher tomorrow but any setback should be short lived; Dr Burton doesn't waste time and I'm sure this will be an exciting and lucrative journey over the next few months.

Was just saying this but looks like you’re a faster typist :)

Hi Draft, long time no speak!
Aren’t you and others misinterpreting the RNS? The £1 per share isn’t for shares in VLS it’s for a share in Altalto Ltd. As you can see from Companies House it has one £1 share in issue at present. Isn’t the RNS simply saying that BA and Shell each have the option to buy a £1 share as well, allowing the three businesses to own a third of Altalto each, pending a shareholders agreement about the funding of Altalto.

And cash has quintupled. Nigel Burton has done a transformational deal at practically every other company he's chaired. Something similar will happen here I have no doubt. Hence I just bought a decent chunk in the placing.

With respect, that's absolute nonsense - it's very far from being a cash shell. It DOES have cash (no debt) but it owns 13% of Sure Valley Ventures, which has stakes in about a dozen high tech firms, some of which are quoted and some have raised money at many times the SVV investment price. The SVV structure means that when a portfolio firm is sold, the cash passes straight back to SVV's investors. This happened last year with the sale of Artomatix at about 5x the investment price - and meant that Pires got most of the cash it invested in SVV back within a couple of months of making the investment. But it still has stakes in all the other portfolio companies. It also has a direct stake in Get Visibility, investing alongside SVV getting the due diligence essentially done for free. Plus maybe 1m shares in Eco Atlantic which it bought at about 16p, and from memory over 1m shares in Portage Biotech which is listed in the US. AND a load of cash coming from the placing - and looks like a stream of further cash coming in from warrants now that the share price is around the warrant strike price.