TIDMECP
RNS Number : 1957F
Eight Capital Partners PLC
03 November 2022
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the UK Market Abuse Regulation. Upon the publication of the
announcement via a regulatory information service, this information
is considered to be in the public domain.
3 November 2022
Eight Capital Partners plc
("ECP", "Eight Capital" or "the Company")
Strategy update
&
Launch of an up to GBP10 million fund raise process as part of
the Company's GBP50m equity issue plans
Eight Capital partners plc, the financial services operating
company that aims to grow revenue through businesses engaged in
"Fintech" operations including in the digital banking and lending,
and, asset and wealth management ("WealthTech") sectors, is pleased
to provide the following update on progress with its
transformational growth strategy, as set out in its announcement of
27 September 2021, and the launch of its fund raise process
("Fundraise").
The Fundraise is the next step in the implementation of ECP's
strategy, providing the Company with an initial tranche of
acquisition funding as well as headroom in its capital structure to
continue the debt to equity conversions committed to by its major
shareholder. The Fundraise will seek to raise up to GBP10m in new
funds (the "Placing Shares"), in stages, resulting in an issue of
up to 50 billion new ordinary shares, in aggregate, at the same
price as the recent debt conversion announced on 17 October 2022.
The completion of the Fundraise, and associated debt conversions,
are key milestones towards the Company's goals of becoming a
significant Fintech operating group and increasing its market
capitalisation to GBP50m and beyond.
Update on transformational growth strategy
In its announcement of 27 September 2021, the Company set out
its key long-term objectives and steps needed to achieve these
goals, a number of which have now either been completed or are
underway:
1. To become an operating Fintech group
The Company's first step was to convert from an investing
company to a Fintech operating company with a strong growth
strategy (further detail below). This was completed in September
2021.
2. The significant restructuring of ECP's balance sheet,
including, inter alia, conversion of some or all of ECP's existing
debt into equity alongside a share placing, which may include an
open offer to all shareholders.
The Company has successfully taken significant steps towards
reorganising its balance sheet, through rearranging the terms of
its Vienna listed bonds (ISIN XS2027405880) ("Vienna Bonds 1") and
converting Euros 3,295,000 of debt into equity, as follows:
i. In June 2022, following bondholder approval, ECP re-organised
the Vienna Bonds 1 to align their commercial terms to that of its
more recently issued listed Vienna bonds (ISIN GB00BP2PO741)
("Vienna Bonds 2"), notably at a lower coupon with a longer
duration to July 2026, providing longevity to its bond
financing.
ii. At the General Meeting in October 2022, approval of a waiver
by shareholders under Rule 9 of the Takeover Code allowed its
largest shareholder, IWEP Ltd, to increase its shareholding above
29.9% and beyond 51%, enabling it to convert Euros 3,150,000 of
Company debt into equity at GBP0.0002 per share. A listed
bondholder also agreed to convert Euros 145,000 of debt to equity
at the same time on the same terms.
3. To grow the market capitalisation of the Company towards and
beyond GBP50 million so that it establishes a strong balance sheet
base from which to significantly expand its operations and its own
equity valuation and therefore become increasingly attractive to
investors.
As noted above, this announcement initiates the next step in the
Company's transformational growth strategy being to:
i. launch a share placing process;
ii. offer new equity to existing shareholders; and
iii. offer holders of Vienna Bonds 1 and Vienna Bonds 2 the
ability to convert their bonds into ECP equity, all on the same
terms.
IWEP Ltd, the Company's major shareholder, remains committed to
converting up to Euros 33 million of existing debt into new equity
as the Company generates free-float headroom, with the issue of new
shares via the Fundraise enabling it to do so.
Fintech Strategy
Following the Company's acquisition of Innovative Finance Srl in
May 2021, the Board stated that ECP would re-energise its focus on
financial services with particular attention being paid to fintech,
decentralised finance and potentially crypto banking. The Board
believes that the trend of major technological change in the way
financial services are delivered will enable faster, cheaper,
easier and more accessible financial services. Furthermore, there
will likely be a fundamental change to the sector's landscape as a
result of industry consolidation driven by new, more agile
entrants.
The Directors believe that there is a particular opportunity
within two areas of Fintech.
Firstly, the Directors' opinion is that is there is a large gap
in SME financial service provision which remains under-served by
the traditional financial services sector. It is the Directors'
view that SMEs are sometimes over-looked by larger funding
institutions or, where served and managed through a traditional
banking approach, can be seen as difficult to underwrite and
therefore expensive to fund. The Company believes there are
significant benefits for SMEs in using "fintech" systems and
innovatively structured capital markets finance solutions to better
access capital, for investment or to assist with working capital
management.
Secondly, it is also the view of the Directors that WealthTech
technology remains under-applied in asset and wealth management,
particularly by asset and wealth managers with lower volumes of
assets under management where fixed costs such as the money manager
teams, property and compliance represent a disproportionate
percentage of revenue. The Company believes that a combination of
consolidation of smaller managers and the use of WealthTech and
decentralised finance models, should greatly improve the quality of
service delivered to customers and improve the profitability and
value of such operations.
Therefore, the Directors consider that a significant opportunity
exists for the group to develop and grow a digital bank, with
access to European markets, at the core of its operations. This
could allow the group to deliver services such as digital banking,
lending and compliance, cross-border, directly to its customers or
to a broader audience through other Fintech platforms. ECP has
therefore decided to pursue an acquisition in this sector.
Currently, no such acquisition has been identified but the
directors consider that the placing proceeds will allow the Company
to access a broader range of opportunities and negotiate better
commercial terms.
To further enhance the development of a core digital bank, and
to deliver on this identified opportunity, other complementary
businesses and Fintech platforms may then be acquired or developed
in areas that may include digital lending and WealthTech. Such
platforms would have access to the group's core digital banking
services and, potentially, better access to capital through
European banking systems. This should greatly benefit such
platforms by providing them access to multiple routes of capital,
centralised compliance and, as they develop, a network of other
digital finance services.
The ability to share distribution of products and customers
across the group would enable more products to be offered to more
customers in a shorter amount of time, than in standalone fintech
business models.
The Fundraise
In order to continue to progress its strategy, the Fundraise
forms the next important next step for ECP, enabling all
stakeholders the opportunity to participate on the same terms.
There are three parts to the Fundraise, comprising:
1. Placing to professional investors;
2. Broker option to existing shareholders;
3. Conversion opportunity for existing listed bondholders
The funds raised will be used, inter alia, to provide
acquisition funding to support and accelerate the Company's core
Fintech strategy and to expand the Eight Capital team.
i. Placing
The proposed placing will be offered to a number of
institutional and professional investors. The company intends to
issue the Placing Shares at a price of 0.02 pence per share,
raising up to GBP10 million of new equity capital. Investors will
also receive one warrant for every Placing Share (the "Warrant").
The Warrants, which are exercisable at 0.05 pence, will have a term
of 12 months.
The proposed placing process is expected to continue for a
period of time, with announcements being made as groups of
investors commit to funding. The Placing Shares will rank
pari-passu with all existing ordinary shares in the Company.
ii. Broker option
The Company intends to offer its existing shareholders the
opportunity to invest, subject to status, on the same terms as all
other investors in the capital raise process.
This will be achieved by existing shareholders' brokers
contacting the Company directly, who will then enable the process
through its registrar. Interested shareholders should ask their
broker to contact Eight Capital at growthstrategy@eight.capital
.
The Broker option opportunity will remain open until 5pm on
Monday 21(st) of November. Existing shareholders should note that
the Company reserves the right to reject applications from brokers
at its sole discretion in the event of any regulatory and/or
jurisdictional issues.
iii. Conversion opportunity
The Company also intends to offer its existing listed
bondholders the opportunity to convert their debt holdings into
equity, on the same terms as all other investors in the capital
raise process.
This will be achieved by existing listed bondholders contacting
the Company directly, who will then enable the process through Bank
of New York, the bond registrar. Interested bondholders should
contact the Company directly at growthstrategy@eight.capital .
For further information, please visit www.eight.capital or
contact:
Eight Capital Partners plc +44 20 3300 0715
Dominic White info@eight.capital
Luciano Maranzana
Cairn Financial Advisers LLP
AQSE Corporate Adviser
Jo Turner / James Lewis +44 20 7213 0880
Walbrook PR Limited +44 20 7933 8780 / +44 7768 807631
Paul Vann/Nick Rome eightcapital@walbrookpr.com
About Eight Capital Partners:
Eight Capital partners plc is a financial services operating
company that aims to grow revenue through businesses engaged in
"Fintech" operations including in the digital banking and lending,
and, asset and wealth management ("WealthTech") sectors.
ECP seeks to grow its group revenue in these high growth fintech
sub-sectors, which it expects to also increase in value, such that
they generate an attractive rate of return for shareholders,
predominantly through capital appreciation.
www.eight.capital
Eight Capital Partners operates two subsidiary businesses:
Epsion Capital:
Epsion Capital is an independent corporate advisory firm based
in London with an extensive experience in UK and European capital
markets. The team of senior and experienced ECM and M&A
professionals is specialised across multiple markets, sectors and
geographies and it prides itself on a commercial approach that
allows the clients to achieve their growth ambitions.
www.epsioncapital.com
Innovative Finance:
Innovative Finance is a corporate finance advisory business that
develops mergers and acquisitions and financing solutions across
multiple sectors, primarily in Europe, with access to international
transactions. It focuses on investments in Europe which are linked
to technological developments in the financial services industry.
www.innovfinance.com
Forward Looking Statements
Certain statements in this announcement, are, or may be deemed
to be, forward looking statements. Forward looking statements are
identi ed by their use of terms and phrases such as "believe",
"could", "should", "envisage", "estimate", "intend", "may", "plan",
"potentially", "expect", "will" or the negative of those,
variations or comparable expressions, including references to
assumptions. These forward-looking statements are not based on
historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of
operations, performance, future capital and other expenditures
(including the amount, nature and sources of funding thereof),
competitive advantages, business prospects and opportunities. Such
forward looking statements re ect the Directors' current beliefs
and assumptions and are based on information currently available to
the Directors.
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END
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