The portfolio will target both early and later stage businesses still in private markets.
Augmentum Capital is looking to raise up to £125m to launch Augmentum Fintech, a newly established internally managed closed-ended investment company.
While a host of investment trusts deploy money into fintech lending platforms alongside small equity stakes, this is the first dedicated closed-ended fund to invest just into fintechs’ equity.
It aims to give investors exposure to a focused portfolio of fast growing and/or high potential private fintech businesses based predominantly in the UK and wider Europe.
The fund will invest in early but - not seed - and later stage investments in unquoted fintech businesses which are high growth, with scalable opportunities, and have disruptive technologies in the banking, insurance and asset management sectors, as well as other cross-industry propositions.
The Rothschild Investment Trust (RIT), chaired by Lord Jacob Rothschild, and Augmentum Capital, the investment managers of the new trust, represent the principal vendors of the Initial Portfolio, and they will invest £10m and £2m respectively into a pipeline in excess of £100m worth of fintech businesses.
The company aims to substantially deploy the net proceeds of the launch cash within 12 months of listing.
The pipeline will targeting several key areas of fintech disruption including banking, insurance, asset management providing the following rationale:
• Banking: “New lenders able to offer customers reduced spread due to lower cost burden and in the case of P2P allow individuals and institutions to access higher deposit rates. New providers often have a lower compliance and capital requirement burden as well as being free from the legacy systems issues that can blight incumbents.”
• Insurance: “Large market with sometimes inefficient systems and many layers in value chain between provider and consumer make it fertile ground for disruption. Industry suffers from one of the lowest customer satisfaction rates.”
• Asset Management: “Crowdfunding went from zero to $2.5bn industry in four years while robo-advisory has brought down portfolio management costs. Millennials are not just more open to non-traditional types of investment than ever before, but actively seek out alternatives.”
Fidante Capital is acting as financial adviser and book runner for the initial public offering (IPO). The prospectus is expected to be published around mid-February 2018 with admission shortly thereafter.
The team responsible for managing the fund’s portfolio of investments include Tim Levene, Richard Matthews and Perry Blacher. It fund will also have an advisory panel consisting of Edward Wray, who also holds directorships at Funding Circle, LMAX, Property Partner and Prodigy Finance as well as Phillip Riese.