musicMagpie, the UK’s largest mobile phone recycler, is planning an AIM flotation. There are no financial details in the announcement, but the company’s VCT backers placed a value of well over £90m on the company at the end of September 2020 and the float valuation is likely to be much higher.
Northern Venture Trust (LON: NVT) says in its accounts that it has a 9.8% equity stake in the technology reseller valued at £10.4m. That suggests a valuation for marketMagpie of £106m. However, there was a mixture of ordinary and preference shares, plus £1.39m of loan stock included in the valuation but it is not clear if the loan stock is taken into account in the equity stake. Excluding loan stock, the valuation would be £92m.
Stockport-based musicMagpie, which is the new holding company for Entertainment Magpie Group, started out as buyer and seller of used CDs and DVDs and it branched out into recycling and reselling technology, including smartphones and tablets. It operates a business in the US under the Decluttr brand – non-European revenues were nearly one-third of the group total.
In the 18 months to November 2019, revenues were £191.6m and the reported loss was £2.98m. There was a £3.3m cash inflow from operating activities.
Subsequent trading has been good as the company benefits from its online focus and greater awareness of environmental concerns. The 2019-20 performance is likely to have been better than the previous results.
AIM-quoted Mercia Asset Management (LON:MERC) owns Northern Venture Managers, which has three VCTs with stakes in Entertainment Magpie Group: Northern Venture Trust, Northern 2 VCT (LON: NTV) and Northern 3 VCT (LON: NTN). Northern Venture Managers funds owned 36.7% of the company at the end of September 2020.
Entertainment Magpie Group generated a significant amount of uplift in portfolio value of the Northern Venture Trust in the year to September 2020. The flotation of the new holding company musicMagpie should provide a further uplift in valuation.