The NAV total return for Augmentum Fintech over the 12 months ended 31 March 2025 was -3.5%. The discount widened from 40.0% to 47.4%, leaving shareholders with a return of -15.4%.
The chairman feels that it was a frustrating year. He says “our portfolio continues to deliver impressive operating performance, we have made two exciting new investments, and we disposed of Onfido and FullCircl , at an average premium of 42% to their previous reported values. On the other hand, as both our operating businesses and our long-suffering shareholders can see every day, the wider market environment has proven – in a word – inhospitable.”
In aggregate, the revenues of the portfolio grew by 31% to £1.22bn and profits were £65m, compared with a £29m loss for the previous year. This trading performance contributed a £31.1m increase in the NAV. However, valuations also took a £15.2m hit from the decline in multiples of publicly traded comparables.
Berlin-based Grover was written down in value by £26.3m. Grover has completed a strategic review and is in the middle of a restructuring.
Investments totalled £18.9m during the year, including in two new investments LoopFX and Pemo, and nine follow-on investments. The exits previously mentioned realised £16.3m.
Portfolio management arrangements
At present, the management of the portfolio is internalised – the managers work for Augmentum Fintech Management Limited (AFML) which is a subsidiary of the company. The board and managers want to change this. A new investment management business (Augmentum Capital LLP) controlled by Tim Levene and Richard Matthews (the CEO and COO) will take on the job. They will also stay on as employees of AFML.
The reasoning for this is that the existing arrangements do not allow for “directors and employees [to have] a binding points-based remuneration structure such as would be typical for venture capital investment managers”, which makes it harder to hire at a senior level and “could be detrimental to staff retention”.
The statement says that “There will be no change to the overall level of fees paid by the company and Augmentum Capital LLP should be able to offer its members and employees a more conventional remuneration package than AFML can, addressing the current structural issue. The agreements that have been negotiated in relation to this change include provisions for fee sharing in respect of any further funds, conserve the existing termination notice period and the company and/or AFML will continue to own the brand and associated intellectual property associated with the management of the portfolio. There will be no change to the company’s AIFM, Frostrow Capital LLP; and AFML will remain as portfolio manager to the company”.
Currently, AFML gets 1.5% of the first £250m of NAV and 1% on any excess. It also gets a performance fee of 15% of excess returns above a 10% annualised realised return on investments.
This needs to be approved by shareholders [the statement says that major shareholders have already been consulted]. There is a meeting at 10am on 24 July.
[QD comment, James Carthew: Transactions such as these always make me uneasy. I am not sure why Tim and Richard need to stay on as employees of the trust. It is not usual for individuals to sit on both sides of the fence in this way. In an environment where there is downward pressure on fees, it would have been good to see some change to the fee such as basing all or part of it on the lower of market cap and NAV, for example.]
AUGM : Augmentum Fintech manager to be spun out
