Augmentum Fintech (AUGM:116p), the primary publicly-listed fintech fund within the UK, has delivered document NAV per share within the 2021/22 monetary yr, buoyed by £56.6mn of web good points on investments, half of which got here from its 6.four per cent stake in Grover, the Berlin-headquartered know-how leases platform.

In April 2022, the German firm accomplished a Sequence C funding spherical, elevating a complete of $330m (£253mn) in debt and fairness, lifting its valuation to greater than $1bn and valuing Augmentum’s stake at £42.4mn. That’s greater than 3 times the £12.9mn carrying worth of the holding within the 2020/21 accounts, and 5.four occasions the group’s whole funding thus far. Grover is a pioneer in know-how rental subscription in Europe – the corporate has greater than 1mn registered customers – and continues to profit from the secular shift in the way in which that customers are utilizing and accessing know-how.

Submit the March 2022 monetary year-end, Augmentum realised £42.8mn (11 occasions cash a number of) from its 3.eight per cent fairness stake in share buying and selling service interactive investor, which has been acquired by Abrdn (ABDN). The disposal accounted for £10.2mn of the group’s funding good points booked, and was one among 4 realisations accomplished. It implies that having raised £55mn, at 135.5p, a share in a putting final summer time, and invested £60.8mn in seven new firms and 7 current portfolio firms within the 12-month interval, the group nonetheless retains £61mn of money, a sum accounting for a fifth of NAV.

Importantly, the funding group led by Tim Levene is sustaining a stringent strategy when assessing potential new investments, committing to put money into solely 0.four per cent of whole alternatives assessed. Furthermore, analyst Anthony Leatham at joint home dealer Peel Hunt notes that the fund has 19 belongings (accounting for nearly four-fifths of NAV), that provide draw back safety options resembling liquidation desire and anti-dilution safety.

It’s additionally price noting that Augmentum’s valuations are conservative as 56 per cent of the portfolio honest valuation is referenced to current transactions, 25 per cent makes use of public market comparables, and 18 per cent pertains to agreed sale costs and exterior fund valuations. In whole, Augmentum’s high 10 holdings (excluding ii) are valued on 5.Three occasions income, materially beneath the 24 occasions income a number of for the Excessive Development Fintech Index.

Leatham provides that the portfolio has 50 per cent publicity to digital and lending and infrastructure, market segments that ought to proceed to do effectively regardless of the financial backdrop, whereas a rising rate of interest atmosphere is optimistic for holdings in Tide, an rising drive within the small- and medium-sized enterprises (SMEs) challenger banking sector and peer-to-peer (P2P) lender Zopa. Tide now has over 7 per cent UK market penetration, and together with Starling, is the main SME challenger banking platform, whereas Zopa reported document first-quarter income and achieved profitability in March this yr. The 2 holdings account for £53.8mn of group NAV of £295mn.

Augmentum’s holdings in Grocer, Tide, Zopa and a £15.4mn stake in Onfido, an AI-based know-how firm that’s constructing a best-in-class identification normal for the web, are the almost certainly near-term portfolio catalysts, analysts imagine.

Nevertheless, although Augmentum is effectively funded, has an enviable observe document of delivering an annualised inside charge of return (IRR) of 22.6 per cent since inception, and has a well-diversified and conservatively valued portfolio, the share value has retraced again in the direction of the 102p entry level in my 2019 Discount Shares Portfolio. Buying and selling on an unjustified 25.3 per cent low cost to NAV (after efficiency charges), the present share value is at odds with Augmentum’s sound fundamentals and development prospects. Purchase.

Microsalt commercialising its know-how

• Microsalt executes its first business-to-business bulk order within the US and begins take a look at advertising and marketing salt-shakers for meals service, eating places and retail gross sales
• London inventory market itemizing being thought-about for 2023

Tekcapital (TEK:22p), an Goal-traded funding firm centered on meals know-how, autonomous automobiles, sensible eyewear and respiratory medical units, has introduced one other optimistic buying and selling replace from investee firm Salarius, a meals know-how enterprise that holds a patented course of to supply, Microsalt, a brand new pure, non-GMO, kosher, low-sodium nanoparticle-sized salt.

Having expanded its roll-out of SaltMe! crisps from 2,400 to three,000 Kroger shops within the US, the enterprise is now experiencing “vital development in on-line gross sales”. It has additionally executed the primary business-to-business bulk order for Microsalt within the US, and began take a look at advertising and marketing of the primary MicroSalt salt-shakers for meals service, eating places and retail gross sales.

Chairman Clifford Gross is contemplating itemizing Microsalt on the London inventory market in 2023, a wise strategy that ought to deliver into sharp focus Tekcapital’s unwarranted low cost to my newest NAV estimate of 38p a share. Microsalt lately acquired an fairness funding of $0.4mn from Spanish enterprise fund Tech Switch Agrifood at a post-money valuation of $9.27mn, valuing Tekcapital’s 73 per cent stake at $6.8mn (3.75p a share).

To place Tekcapital’s present valuation into some perspective, its stake in Goal-traded respiratory medical machine firm Belluscura (BELL) is price £14.3mn (9.5p a share), or nearly half of Tekcapital’s personal market capitalisation of £32.9mn. Which means that the remainder of the portfolio is within the value for 42 per cent of its carrying worth although the Nasdaq IPO of Revolutionary Eyewear (US:LUCY), the US working subsidiary of Lucyd, the primary firm to ship prescription glasses with Bluetooth know-how, has potential to generate materials upside (‘Exploiting info voids’, 6 June 2022) to the £14.3mn (9.5p a share) carrying worth of Tekcapital’s stake.

So, though Tekcapital’s share value has come below strain since my purchase name, I strongly really feel that worth will out in the long run. Purchase.

Simon Thompson was named Journalist of the Yr on the 2022 Small Cap Awards.

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