Last checked at 5 Jun 2018 07:00
5 June 2018
KRM22 plc
("KRM22" or the "Company")
Maiden investment in a 60% stake in Irisium Ltd
- KRM22 makes its first investment in the capital market surveillance market -
- Real-time market surveillance technology company investment -
- Combined sales strength of Cinnober Financial Technology AB, Irisium & KRM22 will provide scale benefits -
KRM22 plc, (AIM: KRM) the technology and software investment company, with a particular focus on risk management in capital markets, today announces it has acquired a 60% stake in Irisium Ltd ("Irisium"), a wholly owned subsidiary of Cinnober Financial Technology AB ("Cinnober").
London-based Irisium provides a turnkey market surveillance system that provides customised, market-specific alerts, tailored reports, and integrated case management to make trade surveillance efficient and straightforward. In addition to traditional market abuse scenarios, Irisium monitors high frequency trading, abusive trading patterns and entity relationships. The rationale for the investment is to provide an integrated market surveillance system as part of the Company's regulatory software suite and to leverage Irisium's existing customer relationships.
Irisium currently has 22 employees, 13 capital markets customers and brings to KRM22 a contracted recurring revenue base of £1.0m with financial institutions, as well as a strong pipeline of prospects. As part of the contract: Cinnober will continue to leverage its sales strength and sell the Irisium offering to its core Exchange market; KRM22 will provide Irisium access to new sales channels to sell to derivatives trading firms and hedge funds; and Irisium will sell directly to all other capital markets sectors.
Under the terms of the transaction, the maximum total consideration for the investment is £2.3m with an initial cash consideration payable to Cinnober of £1.7m for 60% of the share capital of Irisium, financed using KRM22's existing cash resources. An additional deferred consideration of up to a maximum of £0.6m (the "Deferred Consideration") is payable in the event that Irisium achieves £2.0m of annualised recurring revenue as at 30 June 2019. The Deferred Consideration can be satisfied in either cash or ordinary shares of the Company at the Company's discretion. The Company will also be paying Cinnober £0.87m of a £1.4m debt facility provided to Irisium by Cinnober, representing 60% of this debt facility. In addition, KRM22 will provide up to £1.0m to satisfy future funding requirements in order to further develop Irisium's surveillance product offering. As disclosed in the Company's Admission Document, Cinnober is a 9.74% shareholder of KRM22.
The Irisium business assets were purchased by Cinnober in May 2017, and revenues invoiced prior to that date were recognised by the previous company. Therefore, for the 8 months from 4 May 2017 to 31 December 2017, Irisium's revenues were recognised at a lower value (£0.37m) compared to the current contracted recurring revenue base of £1.0m, and the loss before tax was £2.3m for that 8 month period. As at 31 December 2017, Irisium had net liabilities of £2.3m. These net liabilities related principally to the debt facility provided to Irisium by Cinnober in December 2017, which is capitalised as part of the transaction.
This investment is consistent with KRM22's strategy as it aims to achieve its investment objective through the long term investment in, or acquisition of, private and public companies with a focus on risk in the Capital Markets. KRM22 will take a management leadership role and Keith Todd will join the Board of Irisium as Executive Chairman.
Keith Todd CBE, Executive Chairman and Chief Executive Officer of KRM22 plc commented:
"KRM22 was established as an investing company with a long term view to provide a new generation 'Global Risk Platform' to deliver significant improvements for our target customers, through our underlying investments, by providing a suite of cost effective risk management tools.
This investment today demonstrates progress since coming to market. Both KRM22 and Irisium share a common view of the emerging surveillance market and by sharing future investment and combining sales strengths in surveillance we will be able to scale up our presence in this important market."
Veronica Augustsson, CEO of Cinnober Financial Technology, said:
"Today's announcement is consistent with our ambition when we acquired Irisium to find a strategic partner to accelerate growth and consolidate the surveillance market. We have strong confidence in KRM22 and its senior leadership team who have extensive experience and knowledge in building SaaS (Software as a Service) solutions."
For further information please contact:
KRM22 plc via FTI Consulting LLP
Keith Todd CBE, Executive Chairman and CEO
Karen Bach, COO
finnCap Ltd (Nominated Adviser and Sole Broker) +44 (0)20 7220 0500
Carl Holmes / Kate Bannatyne
FTI Consulting LLP +44 (0)20 3727 1000
Matt Dixon / Emma Hall / Jamille Smith / Debbie Oluwaseyi Sonaike
The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
Ends
About KRM22 plc
KRM22 is a closed-ended investment company which listed on AIM on 30 April 2018. The Company has been established with the objective of creating value for its investors through the investment in, and subsequent growth and development of, target companies in the technology and software sector, with a particular focus on risk management in capital markets.
Through investments in businesses with risk management software, KRM22 intends to develop a risk management platform which will be a Software as a Service offering: the "Global Risk Platform" - "RMaaS" (Risk Management as a Service). KRM22 envisages that this will provide capital market organisations with the way forward for better, lower-cost, risk control and regulation compliance to drive profitability. It is intended that once built, the Risk Platform will enable CEOs, COOs, CROs and senior managers to see and manage their full risk position in real-time, optimising business performance.
About Irisium Ltd
In May 2017 Cinnober acquired the business and assets of Ancoa Software, a UK-based market surveillance specialist company, and rebranded the business to Irisium. Irisium provides market surveillance and analytics for exchanges, regulators and both buy and sell-side firms.
About Cinnober Financial Technology AB
Cinnober provides solutions and services to leading trading and clearing venues, including exchanges, clearinghouses, banks and brokers. Cinnober's solutions are largely based on the TRADExpress™ Platform, incorporating everything needed for mission-critical solutions in terms of performance, robustness and flexibility. The portfolio of offerings includes price discovery and matching, real-time risk management, clearing and settlement, index calculation, data distribution and surveillance.
Cinnober's customers include the Asia Pacific Exchange, Australian Securities Exchange, B3, Dubai Gold & Commodities Exchange, Euronext, Japan Exchange Group, Johannesburg Stock Exchange, the London Metal Exchange, LME Clear, NYSE and the Stock Exchange of Thailand.
Using its extensive experience in financial technology, Cinnober has broadened its reach through the establishment of highly specialized and competitive subsidiaries. Today, three such subsidiaries exist within trade reporting and transparency, post-trade and client clearing and trade surveillance and analytics.
Cinnober's shares are traded on the Nasdaq First North exchange and the company's Certified Advisor is Avanza. For additional information, please visit www.cinnober.com.