Shares in fintech trust take 30% haircut

Augmentum Fintech trades at a wide discount but NAV held steady during the half


Augmentum Fintech ended the six-month period to 30 September with a “disappointing” share price, according to its chairman Neil England, as shares ended the half trading at 92p, 30% lower than on 31 March.

The net asset value (NAV) per share, which Augmentum calculates after the performance fee, fell slightly to 155p during its H1, leaving the trust trading at a sizeable discount. The company bought back 1.75 million shares during the half at a discount of 25% from the NAV figure on 31 March.

Augmentum’s share price has experienced some dramatic peaks and troughs throughout 2022, and it is down more than 35% year-to-date at £1, despite a sharp uptick of 16% since 22 November.

The trust received a cash boost of £42.8m during the six months, as Abrdn’s acquisition of long-term holding Interactive Investor completed in May.

A fifth of the portfolio, in terms of net asset value, was in cash and other assets as of 30 September: a sizeable sum of £57m. Only digital banking and lending companies make up a larger percentage of NAV, at 30%.

As a result of the de-listing of Interactive Investor, the value of Augmentum’s investments fell from £269m on 31 March 2022 to £234m by the end of September. It was fortunate enough to see a £9m currency exchange boost, which offset the £7.4m loss of assets through investment performance.

The top 10 largest holdings, which make up 76.6% of the portfolio, increased in value by £6.4m during the period to £179m. Just £74,000 of this figure can be attributed to investment performance, with the stakes in Intellis and Cushon returning the most.

Tech stocks have had a difficult year compared to the highs of 2020-21, and portfolio manager Tim Levene noted that the market environment has forced a “flight to quality”. The company invested only £7.7m during the half, down from £34m in the same period last year.

Its only new holding was a £4m stake in Israeli-based payments innovator Kipp. Aside from that, it made follow-on investments to support Previse (£2m), Habito (£0.7m) and Wayhome (£0.2m).

Levene said: “Despite the macroeconomic challenges, we are very positive about fintech’s future potential. The industry will continue to eliminate friction, improve user experiences, broaden access, and reduce costs. We are only part way through the first phase of the story.”

Chairman England added: “The fintech market offers a substantial opportunity for further growth as technology and business models deployed are now becoming the de facto operating standard across the financial services industry. It is already fast growing but the level of penetration into traditional financial services is still very low in most cases.”

He said that the board remained confident that the long-term investor will be well rewarded.

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