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Seraphim Space updates on plans for remaining cash

During the quarter ended 30 June 2022, Seraphim Space invested £5.3m in three new unlisted investments, and also made two follow-on investments totalling £2.4m. As at 30 June 2022, the company had cash of £57.7m.

Given the big swing in sentiment against growth stocks and the present unlikelihood of Seraphim raising more money, the manager has undertaken a review of the cash runways and funding plans of the private companies in the portfolio and those companies’ own expectations. Based on this analysis, it says that:

  • the companies are well capitalised having, on average, sufficient cash to deliver against their growth strategies, for at least the 12-month period to June 2023, without further capital;
  • of the three companies that may require funding before June 2023, two have additional forms of financing expected to close shortly that would extend their runway beyond June 2023. The remaining one portfolio company, Altitude Angel (1.5% of net assets at 31 March 2022), will need to raise equity capital prior to Q2 2023; this business has recently announced a major commercial milestone in relation to an initial 265km drone superhighway in the UK, in partnership with BT, connecting airspace above Reading, Oxford, Milton Keynes, Cambridge, Coventry and Rugby over the next two years, with the option to expand the corridor to many other locations in the country;
  • Seraphim intends to reserve approximately two-thirds of current cash available for investment (having taken into account its estimated operating costs for the period ending 31 December 2023) to support the next funding rounds of portfolio companies through to 31 December 2023, including Altitude Angel; and
  • the remaining net cash is currently expected to be available for new investments.

Listed Investments

The company’s two listed investments in the top 10 assets, Arqit Quantum and Spire Global, represented 14.3% of NAV as at 31 March 2022, both previously having merged with listed special purpose acquisition companies (SPACs). Their share prices fell substantially (59% and 66% respectively) during the quarter ended 30 June 2022, in common with other SPAC-merged companies. As at 30 June 2022, the aggregate value of these investments was £16.2m (31 March 2022: £35.7m).

The manager says that it remains confident in the prospects for both companies which during the quarter ended 30 June 2022, both reported positive commercial performance.

  • Arqit Quantum: Having commenced commercialisation and begun generating revenue in the first half of its financial year ended 30 September, Arqit Quantum reported significant commercial progress and generated operating income of $12.3m (key clients included the European Space Agency, Virgin Orbit and AUCloud) during the first half of its financial year ending 30 September 2022 ($30m FY22 revenue guidance). At 31 March 2022, Arqit Quantum had a cash balance of $82.2m (30 September 2021: $87.0m).
  • Spire Global: In respect of the first quarter of its financial year ending 31 December 2022, Spire Global reported revenue of $18.1m (86% year over year growth), annual recurring revenue of $81.6m, improved full year guidance and reaffirmed remaining guidance. At 31 March 2022, Spire Global had a cash balance of $91.6m (31 December 2022: $109.3m).

SSIT : Seraphim Space updates on plans for remaining cash

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