TIDMECP
RNS Number : 9751M
Eight Capital Partners PLC
27 September 2021
27 September 2021
Eight Capital Partners plc
("ECP", "Eight Capital" or "the Company")
Corporate Update and Announcement of Transformational Growth
Strategy
Eight Capital (AQSE: ECP), the financial services operating
company, whose wholly-owned subsidiaries, Epsion Capital Limited
("Epsion") and Innovative Finance Srl ("InnFin"), source and
deliver tech, fintech and other on-trend-sector transactions, is
pleased to provide a comprehensive corporate update following the
successful completion of several corporate transactions and
confirmation of the Company's transformation from an investing
company to an operational business within the financial services
sector.
Background
Following the Company's acquisition of InnFin in May 2021, the
Board stated that ECP would re-energise its focus on financial
services investments with particular attention being paid to
fintech, financial services, banking digitisation and crypto
banking themes. 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.
In order for Eight Capital to participate in and benefit from
this major change and to transact at scale, it needs to
significantly strengthen its balance sheet and financial resources,
align its operations and grow its market capitalisation.
The recent corporate transactions undertaken by the Company,
together with the intended actions outlined below, are expected to
transform ECP and enable it to actively participate in these
trends.
Recent corporate transactions
The Company has completed the following strategic transactions
in recent months, initiating the path to reshaping the
business:
-- the strategic acquisition of financial services business
InnFin which provides corporate finance and M&A services with a
particular focus on the financial services sector; and
-- the disposal of Italian financial services business Finance
Partners Group SpA for EUR2.15 million announced on 4 August
2021.
In addition, to help reshape its balance sheet and build scale,
the Company also:
-- purchased EUR40 million 2.5% Fixed Rate Secured Bonds at par
value (the "Fixed Rate Bonds") which significantly increased ECP's
gross assets, announced on 25 August 2021 from IWEP Limited
("IWEP"), a company controlled by ECP's Chairman, Mr Dominic White.
Consideration for the acquisition of the Fixed Rate Bonds was
settled by a one-year vendor loan (the "Vendor Loan"). This
purchase significantly increased ECP's gross assets; and
-- launched EUR25 million 4.8% fixed rate five-year bonds (the
"4.8% Bonds"), of which, EUR50,000 were placed on launch and listed
on the Vienna Stock Exchange, announced on 4 September 2021.
These transactions have consolidated and extended the Company's
services and assisted it in developing a platform from which it can
continue to build as a financial services Company and a stronger
base from which it can raise third party capital.
Change from an investing company into a financial services
operating company
The ECP Board considers there to be value creation opportunities
for shareholders from the further aligning and expansion of the
activities of its wholly owned financial services operating
subsidiaries, Epsion and InnFin (together the "Operating
Subsidiaries"), which deliver tech, fintech and other on- trend
transactions to the markets. The Operating Subsidiaries have been
advising on IPOs, RTOs, M&A, fundraising transactions and other
corporate finance matters.
Through the strategic utilisation of its growing in-house
capital resources, in addition to the services above, the Company
may provide significant support to the transactions managed by its
Operating Subsidiaries through the provision of early-stage and
growth co-investment capital. The competitive advantage of the new
operating group is its flexibility as to where it invests in the
capital stack pyramid, including being equally comfortable with
private or public debt and equity positions, convertibles, and
structured equity or debt facilities. Much of the financial
services advisory market only delivers third party capital and
advice, without direct access to supportive in-house capital, or
only having access to in-house capital lines with a less flexible
mandate.
The Company has therefore moved away from a pure investing
strategy to a financial services operating strategy whereby its
clients' financial services transactions can be supported by
in-house capital.
Key strategic objectives
The Board's objective is 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.
The Board recognises that, in order to build value, the next
steps in the Company's development will require a significant
restructuring of ECP's balance sheet, including, inter alia, the
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 recent launch of the 4.8% Bonds earlier this month was a
logical next step towards enabling the expansion of the Company's
balance sheet, whilst also providing better medium-term visibility
of a refinancing, as ECP's existing listed bonds approach maturity
(EUR3.99 million issued with a coupon of 7% and a 26 July 2022
maturity date (the "7% Bonds")).
To provide further support and commitment to ECP's growth
strategy, IWEP, from which the Company recently acquired the Fixed
Rate Bonds in consideration for the Vendor Loan, will, conditional
on appropriate shareholder approvals and regulatory clearance from
the Takeover Panel in respect of a Rule 9 whitewash resolution,
convert up to EUR25 million of the remaining Vendor Loan into
equity, alongside a planned third party placing and potential open
offer to all ECP shareholders. The Company also intends to provide
an opportunity for all investors to convert debt to equity on the
same terms, to include the current outstanding 7% Bonds.
As part of this balance sheet restructuring, IWEP Limited and
the independent directors of ECP have agreed that EUR15 million of
the outstanding Vendor Loan will be satisfied by the issue at par
of EUR15 million of 4.8% Bonds. Application for the listing of
these Bonds on the Vienna Stock Exchange has been made and
admission is expected to occur on 27 September 2021.
Given the difference in funding associated with the Vendor Loan
and to ensure the Company's cashflows are not disadvantaged while
the proposed restructuring steps are taking place, IWEP has agreed
that the interest rate on the Vendor Loan will be reduced to nil
from the date of the issuance of the 4.8% Bonds, until such time as
all of the above steps have been completed.
Once completed, this conversion of debt into equity, alongside
an equity fundraise, will transform the Company's balance sheet and
scale as well as positively impacting its cashflow through a lower
overall cost of funding.
Management team
Integral to the success of ECP's transition to an operating
business is the senior management team, which has recently been
strengthened with the appointment to the Board in June of former
Bank of England Chief Financial Accountant, David Bull as a
Non-Executive Director.
Following this successful transition, the Board has appointed Mr
Bull as full time Chief Executive Officer, with responsibility for
leading the further development of ECP's financial services
businesses, developing new lines of business, both organically and
through acquisition, all within the context of fintech services. He
will also be strengthening the operational management team through
further additions in financial management and compliance, which
will be at the heart of the Company's operating activities.
As well as organic growth through the development of new
financial services business lines (tech led), the Company will
consider strategic acquisitions to boost revenue and market
presence and consequently provide a return on investment.
Commenting on the transformational progress made recently by the
Group, Dominic White, ECP's Executive Chairman said:
"We are pleased to have reached a point whereby we can provide
more clarity about the short to medium term plans for the Company.
The most progressive financial services businesses are deploying
new technology in their operations which is not only impressive but
also looks likely to dramatically change the industry in the coming
years. We want to access, invest in and implement some of these
technologies in our existing and future operating
subsidiaries."
"We have strengthened the senior management team with David's
appointment as CEO and have demonstrated our intent with the
completion of the recent transactions. A clear pathway lies ahead
for the transformation of the business in terms of its size, market
value and influence in financial services, notably through the use
of fintech. We have an active and growing pipeline of transactions
through our Operating Subsidiaries, we are seeking to raise and
generate capital to co-invest through them, and we have corporate
level potential strategic operating partnerships that we intend to
deliver in the coming months."
"Given the anticipated activity levels and the intended scale of
a much-enlarged operating business, the Board is also considering a
move to the London Stock Exchange's Standard List. As Chairman and
as a substantial investor, I believe that this will lead to greater
growth and increased opportunities as the business moves
forwards."
Related Party Transaction
Dominic White, a director of the Company, is also a director and
the beneficial owner of IWEP. Pursuant to AQSE Rule 4.6, variation
of the Vendor Loan and subsequent issue of 4.8% Bonds to IWEP by
the Company constitutes a related party transaction.
This announcement contains inside information for the purposes
of the UK Market Abuse Regulation and the directors of the Company
are responsible for the release of this announcement.
Eight Capital Partners plc +44 20 3808 0029
Dominic White - Executive Chairman info@eight.capital
David Bull - Chief Executive Officer
Cairn Financial Advisers LLP
AQSE Corporate Adviser
Jo Turner / James Lewis +44 20 7213 0880
Walbrook PR Limited +44 20 7933 8780
Paul Vann/Nicholas Johnson Paul.vann@walbrookpr.com
About Eight Capital Partners:
Eight Capital Partners plc is an international financial
services company focused on owning and operating businesses engaged
in "Fintech" operations, from the digitisation of banking services,
through to blockchain-backed decentralised finance companies and
"crypto banks".
ECP provides equity, debt, and equity-related investment capital
to companies seeking capital for growth and development,
consolidation or acquisition, or pre-IPO financing. The Company
seeks to generate an attractive rate of return for shareholders,
predominantly through capital appreciation, by maximising the
revenues, profits and value of its operating subsidiaries, and
taking advantage of the increasing number of acquisition
opportunities within the continuously developing global technology,
media, telecoms and financial services sectors.
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 is currently working on transactions in the USA
and Europe which are linked to technological developments in the
financial services industry, AI, cybersecurity, e-commerce and
cannabis. www.innovfinance.com
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END
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