UK Online Lender Zopa Valued At $1 Billion In SoftBank Led Funding Round

Legal Entity Identifier: 213800OTQ44T555I8S71

22 November 2021

Augmentum Fintech plc

( the

"Company" or

"Augmentum Fintech")

Interim results for the six months ended 30 September 2021

Augmentum Fintech plc (LSE: AUGM), the UK's only publicly listed investment company focussing on the fintech sector, announces its unaudited interim results for the six months ended 30 September 2021.

Financial highlights

• Net Asset Value increased to £267.3 million (31 March 2021: £183.2 million).1

• NAV per share increased to 142.1 pence after performance fee (31 March 2020: 130.4 pence).

• Unrealised IRR of 21.5% on investments since IPO.

• £55 million gross proceeds raised in July 2021 through a significantly oversubscribed Placing, Open Offer, Offer for Subscription and Intermediaries Offer.

• £43.8 million of available cash as at 30 September 2021 (31 March 2021 £25.7 million).

Investment and portfolio highlights

• £44.5 million capital deployed the period:

o £8.9 million of follow-on investments into five portfolio companies.

o £35.6 million of investments into six new opportunities, including £10.2 million invested in US based crypto exchange Gemini.

• Disposal of holding in Dext for £10.5 million, delivering an IRR of 30.5% on the initial investment.

• Strong progress made in the portfolio companies:

o Funding rounds totalling £210.0 million completed by Grover (April), Volt (June), Tide (July) and Monese (September).

o Tide achieving more than 6.0%2 SME market share.

o Interactive Investor (ii) reported 19% year-on-year revenue growth for H1 2021.

o Grover announced a new USD1 billion debt finance facility.

o Onfido reported a 100% year-on-year revenue growth for H1 2021.

• Post reporting period Zopa announced a £220 million funding round led by Softbank in which the Company is participating.

• The pipeline of investment opportunities under review by the Portfolio Manager significantly exceeds the available cash.

Notes

1. Increase in net asset value includes net proceeds of £53.6m from capital raise in Q3 2021.

2. City AM 12 July 2021

Neil England, Chairman of Augmentum Fintech plc commented:

"I am pleased to report on another period of strong growth with a net increase of 9% in NAV per share after allowing for the performance fee. Reflecting the growth of Fintech across Europe, we made investments in a further three countries and appointed Conny Dorrestijn, a prominent member of the European fintech scene, to our board. Our £55 million fundraise in June was significantly oversubscribed, indicating endorsement of our investment thesis, and we thank shareholders for their support.

The fintech market, which addresses both the incumbent players as well as new market segments, continues to offer a substantial opportunity for further growth and your Board remains confident that the long-term investor will be well rewarded."

Tim Levene, CEO of Augmentum Fintech Management Limited commented:

"Our portfolio has continued to prosper over the last six months. The results published today reflect the continued potential of tech-led businesses and the efforts of many across our portfolio who seized opportunities from the recent step-change in financial services digital adoption. We continue to see unprecedented levels of fintech investment activity across Europe but we remain mindful of the adage that not every good business is a good investment. Whilst there are many new investors who wish to build exposure to fintech at any cost, our long history and strong reputation in the sector will provide us access to opportunities that many others will struggle to see."

END

Augmentum Fintech

Tim Levene, Portfolio Manager

Nigel Szembel, Investor Relations

+44 (0)20 3961 5420

+44 (0)7802 362088

[email protected]

Peel Hunt LLP

Liz Yong, Luke Simpson, Huw Jeremy

(Investment Banking)

+44 (0)20 7418 8900

Singer Capital Markets

Harry Gooden, Robert Peel, James Moat

(Investment Banking)

+44 (0)20 7496 3000

Frostrow Capital LLP

Paul Griggs, Company Secretary

+44 (0)20 3709 8733

About Augmentum Fintech

Augmentum invests in fast growing fintech businesses that are disrupting the financial services sector. Augmentum is the UK's only publicly listed investment company focusing on the fintech sector in the UK and wider Europe, having launched on the main market of the London Stock Exchange in 2018, giving businesses access to patient capital and support, unrestricted by conventional fund timelines and giving public markets investors access to a largely privately held investment sector during its main period of growth.

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Augmentum Fintech plc

Half Year Report for the six months ended

30 September 2021

.

CHAIRMAN'S STATEMENT

Introduction

This report covers your Company's progress in the six months to 30 September 2021 and its financial position as at that date.

Investment Policy

Your Company invests in early stage fintech businesses which have disruptive technologies and offer the prospect of high growth with scalable opportunities, a policy consistent with our objective to provide long term capital growth to shareholders.

Performance and Transactions

I am pleased to report that the investments continued to perform well in the half year to 30 September 2021, with an increase in the Group's NAV per share of 13.3% and an increase of 9.0% in the NAV per share after performance fee*.

During the period under review new investments were made in Tesseract (Finland), Anyfin (Sweden), Cushon (UK), Epsor (France), and Gemini (US). The Company made its first disposal in the period, with the sale of Dext (previously Receiptbank) realising a 30.5% IRR* over an investment period of just 15 months.

The Portfolio Manager's report, beginning on page 8, includes a detailed review of the portfolio and investment transactions in the period.

Fundraising

The Company's fundraise in July raised gross proceeds of £55 million and was significantly oversubscribed, endorsing our investment thesis. 40,590,406 new ordinary shares were issued at 135.5p per share by way of the initial placing, open offer, offer for subscription and intermediaries offer. The issue price represented a premium of 3.9% to the NAV per ordinary share as at 31 March 2021 and a discount of 6.1% to the closing price per ordinary share on 11 June 2021 (this being the last business day prior to the announcement of the issue price). The Portfolio Manager has developed an interesting pipeline of investments and the increase in the size of the Company will allow them to deploy resources into some of these opportunities. The enlarged size of the Company should deliver additional benefits in that the appeal of an investment company typically broadens as the company increases in size, it reduces the ongoing charge percentage and should improve market liquidity. There are now 181,013,697 ordinary shares in issue. As at the date of this report the Company has invested £158.7 million since inception and holds £43.8 million of free cash. The pipeline of investment opportunities under review by the Portfolio Manager significantly exceeds the available cash.

Portfolio Management

Our investment team continues to work very hard evaluating a wide range of investment opportunities, reviewing and challenging financial and commercial metrics in order to identify those most likely to be successful. We are active investors with a team that works closely with the companies we invest in, typically taking either a board or an observer seat and working with management to guide strategy consistent with long term value creation. We have built a balanced portfolio across different fintech sectors and maturity stages and are focused on managing these investments and carefully growing the portfolio further. The investment team is also committed to a responsible investment approach through the lifecycle of the investments, from pre-screening to exit, believing that the integration of Environmental, Social and Governance ("ESG") factors within the investment analysis, diligence and operating practices is pivotal in mitigating risk and creating sustainable, profitable investments. More details on this were provided in the 2021 annual report.

Performance Fee

As reported in Note 18 of the 2021 Annual Report there is a mis-match between accounting standards that required the Company's subsidiary, Augmentum Fintech Management Limited ('AFML'), to recognise performance fees potentially payable to its employees based on current investment valuations but did not permit AFML to recognise the matching performance fee receivable from the Company until it was virtually certain to be paid. In order to ensure that this did not cause AFML to be in breach of its regulatory capital requirements the AFML scheme was terminated and the performance fee liability to employees as at 31 March 2021 was reversed, resulting in a credit to the Group Income Statement of £6.5 million. AFML continues to be entitled to a performance fee as before, but any performance fee paid by the Company to AFML will now be allocated to employees of AFML on a discretionary basis by the Management Engagement & Remuneration Committee of the Company. See Note 2 on page 25 for further details.

In order to ensure that shareholders can understand the potential impact of the performance fee we will report a new NAV, 'NAV per share after performance fee', in our Annual and Interim Reports. The Board considers that the NAV per share after performance fee better reflects the current value of each share. See Note 5 and the Glossary on page 38 for further details of this alternative NAV.

Board

On 21 September 2021, the Board announced the appointment of a new non-executive Director, Conny Dorrestijn, effective on 1 November 2021. I am delighted to welcome Conny to Augmentum Fintech plc. She has been an active part of the European fintech scene for many years and has worked with a number of early stage fintech businesses. Conny's skills and experiences are complementary to those of the other Directors and we value the new perspective she will bring to Board discussions. Conny also joins the Audit, Valuations, Nominations and Management Engagement & Remuneration committees.

Outlook

As we continue to adapt to this changing world, the opportunity for fintech businesses remains considerable. It is inevitable that all financial institutions, whether incumbent or new, will be touched by technological developments. The Company is well positioned to capitalise on this, as the UK's only listed specialist fintech fund. We offer access to some of Europe's most exciting fintech businesses and our recent successful fundraise has allowed us to continue to grow our portfolio.

We have an interesting and diverse set of investments and an experienced investment team. The fintech market offers substantial opportunities for further growth and as a consequence your Board remains confident that the long term investor will be well rewarded.

Neil England

Chairman

19 November 2021

*Alternative performance measure. See note 5 and Glossary on page 38

.

INVESTMENT OBJECTIVE AND POLICY

Investment objective

The Company's investment objective is to generate capital growth over the long term through investment in a focused portfolio of fast growing and/or high potential private financial services technology ("fintech") businesses based predominantly in the UK and wider Europe.

Investment policy

In order to achieve its investment objective, the Company invests in early or later stage investments in unquoted fintech businesses. The Company intends to realise value through exiting these investments over time.

The Company seeks exposure to early stage businesses which are high growth, with scalable opportunities, and have disruptive technologies in the banking, insurance and wealth and asset management sectors as well as those that provide services to underpin the financial sector and other cross-industry propositions.

Investments are expected to be mainly in the form of equity and equity-related instruments issued by portfolio companies, although investments may be made by way of convertible debt instruments. The Company intends to invest in unquoted companies and will ensure that the Company has suitable investor protection rights where appropriate. The Company may also invest in partnerships, limited liability partnerships and other legal forms of entity. The Company will not invest in publicly traded companies. However, portfolio companies may seek initial public offerings from time to time, in which case the Company may continue to hold such investments without restriction.

The Company may acquire investments directly or by way of holdings in special purpose vehicles or intermediate holding entities (such as the Partnership*).

The Management Team has historically taken a board or board observer position on investee companies and, where in the best interests of the Company, will do so in relation to future investee companies.

The Company's portfolio is expected to be diversified across a number of geographical areas predominantly within the UK and wider Europe, and the Company will at all times invest and manage the portfolio in a manner consistent with spreading investment risk.

The Management Team will actively manage the portfolio to maximise returns, including helping to scale the team, refining and driving key performance indicators, stimulating growth, and positively influencing future financing and exits.

Investment restrictions

The Company will invest and manage its assets with the object of spreading risk through the following investment restrictions:

• the value of no single investment (including related investments in group entities or related parties) will represent more than 15 per cent. of Net Asset Value;

• the aggregate value of seed stage investments will represent no more than 1 per cent. of Net Asset Value; and

• at least 80 per cent. of Net Asset Value will be invested in businesses which are headquartered in or have their main centre of business in the UK or wider Europe.

In addition, the Company will itself not invest more than 15 per cent. of its gross assets in other investment companies or investment trusts which are listed on the Official List of the FCA.

Each of the restrictions above will be calculated at the time of investment and disregard the effect of the receipt of rights, bonuses, benefits in the nature of capital or by reason of any other action affecting every holder of that investment. The Company will not be required to dispose of any investment or to rebalance the portfolio as a result of a change in the respective valuations of its assets.

Hedging and derivatives

Save for investments made using equity-related instruments as described above, the Company will not employ derivatives of any kind for investment purposes. Derivatives may be used for currency hedging purposes.

Borrowing policy

The Company may, from time to time, use borrowings to manage its working capital requirements but shall not borrow for investment purposes. Borrowings will not exceed 10 per cent. of the Company's Net Asset Value, calculated at the time of borrowing.

Cash management

The Company may hold cash on deposit and may invest in cash equivalent investments, which may include short-term investments in money market type funds and tradeable debt securities.

There is no restriction on the amount of cash or cash equivalent investments that the Company may hold or where it is held. The Board has agreed prudent cash management guidelines with the AIFM to ensure an appropriate risk/return profile is maintained. Cash and cash equivalents are held with approved counterparties, and in line with prudent cash management guidelines, agreed with the Board, AIFM and Portfolio Manager.

It is expected that the Company will hold between 5 and 15 per cent. of its Gross Assets in cash or cash equivalent investments, for the purpose of making follow-on investments in accordance with the Company's investment policy and to manage the working capital requirements of the Company.

Changes to the investment policy

No material change will be made to the investment policy without the approval of Shareholders by ordinary resolution. Non-material changes to the investment policy may be approved by the Board. In the event of a breach of the investment policy set out above and the investment and gearing restrictions set out therein, the Management Team shall inform the AIFM and the Board upon becoming aware of the same and if the AIFM and/or the Board considers the breach to be material, notification will be made to a Regulatory Information Service.

* Please refer to the Glossary on page 38

.

PORTFOLIO

as at 30 September 2021

Fair value of

holding at

31 March

2021

£'000

Net

investments/

(realisations)

£'000

Investment

return

£'000

Fair value of

holding at

30 September

2021

£'000

% of

portfolio

Interactive Investor^32,631 - 4,036 36,66716.4%
Tide18,962 2,200 5,166 26,32811.8%
Grover12,937 - 5,629 18,5668.3%
Onfido14,851 - 1,904 16,7557.5%
Zopa^9,501 - 5,725 15,2266.8%
Monese10,341 1,167 628 12,1365.4%
BullionVault^11,465 - (418) 11,0474.9%
Farewill10,591 - - 10,5914.7%
Gemini**- 10,243 - 10,2434.6%
Iwoca7,971 -(97) 7,8743.5%

Top 10 Investments

129,250

13,610

22,573

165,433

73.9%

Other Investments*34,877 20,354 3,244 58,47526.1%

Total Investments

164,127

33,964

25,817

223,908

100.0%

^ Held via Augmentum I LP

* There are fourteen other investments (31 March 2021: ten) held in the portfolio. see page 18 for further details.

** Held through Augmentum Gemini Ltd

.

PORTFOLIO MANAGER'S REVIEW

Overview

When I wrote to you this time last year the world was six months into the pandemic and our focus had been on ensuring that our portfolio companies were well equipped to deal with the uncertainty of the environment in which they found themselves. The pandemic is still with us, but it seems that the world is gradually learning to live with its impact and is adapting to the new normal. As a result of the nimbleness of tech led businesses and the efforts of the management teams, our portfolio has prospered over the last six months.

Fintech as a sector continues to go from strength to strength with an increasing number of investors drawn to the sector. The presence of several, and significant, new investors to the sector has led to record levels of investment and makes it more important than ever that we hold our discipline on valuations and only deploy your money into opportunities where we fully buy into the investment case as well as the business case.

One sector which has been particularly competitive is the digital currency and asset space. This is an area that in many ways is seeking to redefine the financial landscape and we have taken a number of positions to increase our exposure to it as you will note in the Investments section below. Our thesis on the space is to invest principally into the infrastructure that is being built to take the digital world into the mainstream rather than directly into the tokens themselves.

Investments

The reporting period has been a busy one for the portfolio with movements across no fewer than 13 companies. In total £44.5 million has been invested across six new additions and five follow on investments. We have also exited two investments in the period and one post period end. As well as the previously announced sale of our investment in

Dext for £10.5 million, we also took the opportunity to exit from two of our smaller holdings,

SRL Global , in August, and

Seedrs , post period end in November, at their last reported valuations of £1.0 million and £2.4 million respectively, in order to focus on opportunities that allow us to deploy more material sums.

New Investments

We have invested a total of £35.6 million across the six new companies during the reporting period.

As reported in our March results, we devoted significant effort in late 2020 to understanding the opportunities across the digital asset space, partnering with Parafi as our first proactive step in the first quarter of 2021. In June this year we completed our first direct investment in the space by leading

Tesseract's US$25 million Series A funding round with a $10 million (£7.3 million) investment alongside Sapphire Ventures, Leadblock Capital, Blackfin, DN Capital and Coinbase Ventures. Helsinki based Tesseract build the infrastructure to connect borrowers and (institutional) lenders in the digital asset space, helping to extend credit provision in what is currently an under-penetrated space.

In September we closed our second investment in the Nordic region with a US$10 million (£7.3 million) subscription in the $52 million Series B funding round of

Anyfin alongside investors EQT, Northzone, Accel and GFC. Anyfin's purpose driven mission is to aggregate and refinance consumer credit at more affordable rates. This is made possible by more significant automation of the loan process, better underwriting decisions made through the availability of the refinanced credit performance history, and by broader access to both open banking data and publicly available data enrichment. The team, formed mainly of early Klarna executives, have driven significant growth across multiple markets and will use the proceeds of the round to drive broader international expansion.

Continuing the digital asset theme, and leveraging our market relationship with co-investors Parafi, we have been able to invest US$13.8 million (£10.2 million) in the first private funding round, totalling $400 million, of Gemini, a leading US based crypto exchange.

As a broad fintech focused fund we have considered a significant number of capital markets propositions since our launch in March 2018. In September we completed our first investment in the space by subscribing US$5 million (£3.7 million) of a $17 million round, led by Deutsche Börse, in the Tel Aviv headquartered but largely French domiciled company

WeMatch. Founded in 2017, WeMatch offers a dealer-to-dealer matching, negotiation and workflow tool for traders of structured financial products. The proposition brings electronic trading capabilities to banks and other buy side firms, an environment that is still dominated by manual offline transactions and records.

As we disclosed in our March results, we also closed during the period a first €2.5 million (£2.2 million) investment into the French workplace savings platform

Epsor , alongside Revaia Capital (formerly Gaia Capita) in a competitive €20 million financing round, and in parallel led the series A round with a £5 million investment in the UK based pensions aggregator,

Cushon . We believe the workplace pensions and savings opportunity across Europe remains significant, with much disruption still to come.

The Existing Portfolio

Follow on investments have been an important part of our investment mix over the reporting period, as our companies emerge from the challenges of 2020 and embrace the opportunities created by an increasingly digital world. In total we have invested £8.9 million in follow on investments into our existing portfolio.

We first welcomed

VOLT to the portfolio in December 2020 as announced in our March results.

VOLT is the leading provider of account-to-account payments orchestration for international merchants and payment service providers. Broadly this means they are providing resilient payment networks using open banking rails as an alternative to traditional card rails. In June the company raised its Series A round totalling £14 million led by EQT, in which we contributed £4 million of fresh capital and converted our existing convertible loan note at a significant discount to the round price. The company is now building against its various opportunities in the space.

We invested a further £1.2 million in

Monese as part of a round led by new investor Investec, and supported by existing investors Paypal and Kinnevik. Monese is providing its banking infrastructure as a service to support Investec's new retail banking proposition. The business continues to develop its technology platform and product which is now available in 31 countries across Europe.

Tide have continued to build and consolidate on their market leading opportunity with their SME banking platform and proposition. Now with more than 6.0% market share of SME current accounts, the company is the leading challenger banking platform in the space with only the incumbent big 5 banks serving more customers in the UK. The company is now well advanced in executing against identified opportunities in India, its second target market. Against these successes

Tide completed an £80m Series C funding round in July led by Apax Digital in which we invested £2.2 million and converted a £2 million convertible loan note.

Since obtaining its banking license in June 2020,

Zopa has successfully launched a fixed term savings product and a credit card to address identified gaps in the market. Demand for its savings account has been strong in the low interest rate environment. As at mid-year it already had over 100,000 customers for the credit card offering, seen a 3.5 times increase in volumes for auto-loans and was enjoying disbursals significantly ahead of budget levels. Since the period end, the company has recently agreed a £220 million new funding round led by SoftBank Vision Fund in which we have secured a meaningful investment allocation.

We also made smaller investments of £1.0 million in

Wayhome by way of a convertible loan note as they launch their unique home finance proposition and acquire their first properties, and a £0.5 million investment into

Artesian (formerly

Duedil ) as part of the merger process between the two companies completed in September.

There has also been particularly notable performance from a number of other companies in the portfolio:

Interactive Investor (ii) has continued to build on the record client growth it experienced during the boom of 2020. The company reported 19% year-on-year revenue growth for the first half of 2021, driven primarily by continuing strong market activity offset by declining interest revenue. It also reported 33% year-on-year growth in the number of new client additions - demonstrating that the momentum built during 2020 is being sustained. As at the end of June the company had more than 400,000 customers with Assets Under Management approaching £55 billion.

Since the period end, the company has announced that it is in discussions with Abrdn regarding a potential acquisition of the company. However, it continues to explore a number of options, including an IPO.

As we previously reported in our March results,

Grove r completed its Series B funding round in March, raising €60 million to further develop the rental platform and expand into new geographies. It has since considerably strengthened its balance sheet, announcing a new US$1 billion debt finance facility in July positioning the company for significant onward growth. The company recently appointed a US executive to lead operations in the US and launched a pilot programme during September with strong early market indications.

Onfido continues to build on the foundation it laid in its US$100 million financing round completed in April 2020. In the first half of 2021 it reported a 100% year-on-year increase in bookings and revenue driven by some leading marquee client signings. The business has continued to grow their share of bookings from existing clients, with strong tailwinds from trends in the digital asset space.

Performance

For the six months to 30 September 2021 we are reporting gains on investments of £25.8 million (2020: £2.7 million). Since IPO this represents an IRR of 21.5% on the capital that we have deployed.

Outlook

As I wrote to you in June in the Annual Report, the level of investment activity in the European fintech sector is at unprecedented levels and we are seeing this in our dealflow pipeline where we continue to see growth in the number of opportunities and, in many instances, the valuation expectations attached to them. The quality of opportunities 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 less than 0.5%. The bar must remain exceptionally high, and we believe our network and sector specialism can continue to differentiate us from a growing crowd of generalist investors, some of whom only offer price as their key differentiator.

Our belief in the potential of the sector remains as strong as ever and that our portfolio is well placed to benefit not just from this surge of investment interest but also from the wave of adoption of fintech propositions by consumers and businesses globally.

Tim Levene

CEO

Augmentum Fintech Management Limited

Source : https://www.finanznachrichten.de/nachrichten-2021-11/54550100-augmentum-fintech-plc-half-year-report-008.htm

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