Augmentum Fintech enjoys NAV uplift but share price suffers – Augmentum Fintech (AUGM) has posted its final results for the year to 31 March 2022, during which time its NAV per share after performance fee delivered 19%.
However, the share price and total shareholder return, down by 16%, did not reflect the strong performance of the portfolio which the board says had been influenced by the global mark down of listed technology stocks and associated market sentiment.
In July 2021, AUGM raised gross proceeds of £55m through a significantly oversubscribed fundraising. This provided the resources to continue to add new exciting fintech companies to the portfolio and to make further investments in existing portfolio companies. However, the second half of the year saw a slower rate of deployment, reflecting the disciplined approach to investment decisions which has often seen the manager decline to participate in investments at prices that others have been prepared to pay.
The investment pipeline remains strong and the manager continues to have visibility over the bulk of the opportunities in European fintech. The board believes that, despite market headwinds affecting the current share price, the company will generate rewarding returns to shareholders.
CEO’s outlook
We have evolved in just six short months from a risk on market that had developed over a number of years to a risk off environment. The shift in sentiment has not taken us by surprise and we have built up a healthy cash buffer of, at the date of this report, £61.0 million to ensure we can both support our existing portfolio and also capitalise on compelling opportunities in the fintech market over the coming 12 months and beyond.
The volume of venture capital raised over the last two years leaves significant “dry powder” commitments across Europe, with estimates suggesting more than two and a half years of capital in place at deployment rates matching the last two years. Such volume of capital seeking a finite number of quality investments is likely to serve to continue to maintain momentum for the fintech sector. In addition there has consistently been a trend, particularly in fintech, for companies to stay private for longer, something that the external market conditions is likely to reinforce.
Seeing potential squeezes at both entry and exit therefore means that discipline is vital. The quality of opportunities in our pipeline remains high with more and more talent drawn to the sector. Not every good business is a good investment though and our conversion rate of meeting companies and ultimately investing is currently at 0.4%. The bar must remain exceptionally high, and our central thesis of investing only in areas of high conviction and/or secular trends in consumer behaviour, will continue to dominate our decision making.
Our belief in the potential of the sector remains as strong as ever. Our core holdings in the portfolio are well placed, well funded and with sufficient liquidity to benefit from continuing market opportunities as they evolve.
AUGM : Augmentum Fintech enjoys NAV uplift but share price suffers