The investment trust launched six months ago and is looking to still deploy £44m into firms disrupting traditional finance.
Venture capital investment trust Augmentum Fintech has seen a 5.1 per cent increase in its Net Asset Value [NAV] just six months on from its stock market debut, according to an investor update from the firm.
The closed ended fund launched via an initial public offering (IPO) at £94m, made up of a seed portfolio of five investments valued at £33.3m, with a just over £60m cash pot created from the newly issued shares.
Thanks to an increase in Zopa’s valuation following a recent fundraise and another increase in Interactive Investor, the seed portfolio has seen an (unrealised) annualised Internal Rate of Return (IRR) of 30 per cent taking its value to £38.5m, the fund said.
Its investment managers have also made new investments worth £15m in fintech companies but say they have only deployed into 1.5 per cent of potential deals (or five out of 350) discussed in company meetings.
New investments include Tide, a digital SME bank; Duedil a platform digitising company information and the people behind them, Unmortgage which attempts to replace mortgage debt with institutional equity for the younger generations who cannot afford to buy the home they rent and Monese which provides banking services typically to those who work abroad and need a local bank account and find it difficult to meet the usual account opening requirements such as residential history.
Tim Levene, CEO of Augmentum Fintech Management said the fund’s strategy is to back Europe’s “most exciting fintech businesses that are disrupting and enhancing the traditional financial services industry”.
This is typically at an early stage, but not seed capital, but at Series A and B investment rounds. This is so, Levene says, there is more visibility on a company’s potential.
“At the same time, we are not afraid to be contrarian and will also look for value in fintechs that have not fulfilled their early promise and perhaps lofty valuations,” he added.
“These companies can require fresh capital, restructuring and impetus to build on a solid base that has sometimes taken longer to mature than early investors anticipated. We have seen this first hand in our Initial Portfolio, with Zopa and interactive investor.”
Neil England, Chairman of Augmentum Fintech says the rate of capital deployment is “as anticipated”.
“We expect to make announcements on further investments in due course as our Portfolio Manager works toward our objective of being substantially fully deployed by mid-2019,” he said.
Augmentum’s shares trade on a discount of 7.5 per cent.
Now in its sixth year, the AltFi London Summit returns on 18th March 2019 to 155 Bishopsgate. Last year proved to be a crucial turning point for the key players building the future of finance. Leading platforms launched oversubscribed IPOs, digital banks proliferated and mainstream financial institutions started their own disruptive propositions. With 2019 certain to be another landmark year, more questions will be asked by regulators with investor interest in disruption also poised for more rapid growth.