Augmentum reports year of solid NAV growth

25th Jun 2024 10:54

(Sharecast News) - Augmentum Fintech reported a 3.1% increase in its net asset value before performance fees in its annual report on Tuesday, rising to £303.3m from £294.1m in the prior year.

The London-listed firm said the value of the investment portfolio grew to £265.1m in the 12 months ended 31 March, from £254.3m a year earlier.

Its net asset value per share after performance fees saw a 5.4% increase to 167.4p, driven by a net investment return of 6.8p and the impact of share buybacks adding 1.7p.

Cash reserves stood at £38.5m at year-end on 31 March, and increased to £44.8m by the end of May, up from £40m the prior year.

The portfolio's top three positions - Tide, Zopa Bank, and Grover - along with a strong cash position, closely matched Augmentum's market capitalisation of £170m at year-end.

Augmentum said those companies achieved remarkable revenue growth averaging over 1,300% since initial investment, and were either already profitable or expected to reach profitability without further funding.

Its top 10 holdings, representing 81% of the portfolio value, saw average revenue growth of 65% year-on-year, with five positions being cash generative and others having an average cash runway of 203 months.

A significant highlight was the acquisition of Cushon's majority shareholding by NatWest Group, which returned £22.8m to Augmentum, delivering a 2.1x multiple on invested capital and an internal rate of return of 62%.

Additionally, the post-year-end exit from Onfido, acquired by Entrust, provided a 1.3x return on invested capital and a 5.8% internal rate of return.

Since inception, the company's portfolio had seen six exits, all at or above their last reported value, realising a cumulative £89.6m in proceeds - £55.9m over original cost, yielding a 2.7x multiple on invested capital.

The internal rate of return on invested capital since inception stands at 16%.

Investment activity remained disciplined, with £15.8m invested over the year in one new company, Artificial Labs, and six existing portfolio companies.

Post-year-end, £2.6m was invested in a new portfolio company, LoopFX.

Portfolio updates included Tide, which now held a 10% share of the UK SME banking market and was structurally profitable.

Augmentum invested an additional £4.2m in Tide, which was expanding internationally to Germany after a successful launch in India.

Zopa Bank meanwhile raised £75m in tier two capital to support growth, reached full-year profitability in 2023, and now served over one million customers.

Volt completed a $60m series B funding round led by IVP, with Augmentum contributing an additional £5.3m.

The company noted that Volt was also selected by Worldpay and Shopify as their global A2A partner.

"The UK equity market has been largely out of favour and investment company discounts are running at historic highs in many cases," said chairman Neil England.

"However, UK inflation numbers are improving, and history suggests that growth companies such as Augmentum will be early beneficiaries of any rally inspired by declining rates."

England said the company maintained its investment discipline over the last year and, with strong cash reserves of £44.8m as at 31 May, it was well-placed both to take advantage of new opportunities and to reinforce its appeal as a supportive investor.

"We have a healthy pipeline of opportunities under consideration."

At 1013 BST, shares in Augmentum Fintech were up 5.13% at 115.64p.

Reporting by Josh White for Sharecast.com.