Augmentum Fintech: Our portfolio can weather the coronavirus storm

By Aisling Finn on Tuesday 24 March 2020

Savings and Investment

The fintech-focussed venture capital fund has reassured investors that it’s business as usual.

Augmentum Fintech: Our portfolio can weather the coronavirus storm
Image source: The Augmentum Fintech team.

Augmentum Fintech, the publicly-listed VC focused on the fintech sector, has moved to reassure investors that despite the coronavirus pandemic its portfolio can hold up in the current economic climate.

This announcement comes after Augmentum’s share price nearly halved from £1.03 per share on 21 February 2020, to just £0.56 on 24 March 2020, a 46 per cent reduction.

In a stock market update, Augmentum moved to reassure investors that the firm had adjusted to remote working and the companies in its portfolio are stable.

When discussing the exposure of its portfolio to coronavirus, the letter read: “Each of these companies is built upon innovative, best-in-class technologies and is overhead-light, with lean and efficient operations.” 

“These companies are agile, able to respond to changing market conditions, well-versed in remote working, and consequently have reduced operational risk compared to many other larger companies.”

Some of the companies in Augmentum’s portfolio include SME business banking service Tide, digital current account provider Monese, alternative lender Zopa and SME lender iwoca.

The letter also went into more detail about some of the companies on Augmentum’s books.

For instance, it mentioned that iwoca is in communication with the Government both here in the UK and in Germany and is “in talks with HM Treasury in regard to the £330bn support package for SMEs,” to ensure the Government can help SMEs through this period of economic uncertainty.  

The release also commented on Augmentum’s tumbling share price and as a result, said it will buy back its own shares to reassure investors that it has faith in its own operations. 

An analyst at investment bank Liberium in response to the update, wrote: “Augmentum's update highlights the benefits of many companies operating in the fintech sector. These companies tend to be more agile than larger, traditional businesses and are often well versed in working remotely, with relevant IT infrastructure already in place.”

“However, certain parts of the portfolio (e.g. Zopa, iwoca) may experience a challenging period with much lower volumes and increased credit risks that could result in higher than average default rates on the loans.”

In a closing statement, the board members of Augmentum said: “We believe firmly that the Company has a diversified, balanced and robust portfolio which is well-positioned to weather the current market stresses and potentially even benefit from additional opportunities created by these market conditions over the medium term.”

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