abrdn Private Equity Opportunities presents at the UK Investor Magazine Virtual Investment Trust Conference March 2023.
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abrdn Private Equity Opportunities provides access to a diversified portfolio of private equity investments.
This is delivered through the investment objective, which is to achieve long-term total returns through holding a diversified portfolio of private equity funds and co-investments, a majority of which will have a European focus.
The Temple Bar Investment Trust presents at the UK Investor Magazine Virtual Investment Trust Conference March 2023.
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Temple Bar’s investment objective is to provide investors with a growing income combined with growth in capital. It aims to meet this objective by investing primarily in UK equities, across different sectors, maintaining a balance of larger and smaller/medium-sized companies. The Trust has a bias towards FTSE 350 companies. We were joined by Portfolio Manager Ian Lance.
HydrogenOne Capital presents at the UK Investor Magazine Virtual Investment Trust Conference March 2023.
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HydrogenOne is the first London-listed hydrogen fund investing in clean hydrogen for a positive environmental impact.
The Company was launched in 2021 with an investment objective to deliver an attractive level of capital growth by investing in a diversified portfolio of hydrogen and complementary hydrogen focussed assets. INEOS Energy is a strategic investor in HydrogenOne.
Problems at Silicon Valley Bank do not just affect US companies. There are smaller companies on AIM and the Main Market that have facilities provided by the ailing bank.
Silicon Valley Bank sold up to $21bn in bonds, taking a loss of nearly $2bn, because of its need for cash. Trading in the bank’s shares was suspended on the Nasdaq in the US after the price fell by two-thirds. The bank is apparently looking for a buyer.
Many of the companies have loan facilities with other banks as well as Silicon Valley Bank. It is unclear if any have deposits with the bank. Here are some of the clients of Silicon Valley Bank, although some do not appear to be utilising the loan facility.
Molten Ventures (LON: GROW)
Venture capital firm Molten Ventures has a £150m debt facility with Silicon Valley Bank and JP Morgan Chase. The potential drawdown is based on 10% of the value of the investment portfolio.
This facility was put in place last September and a £90m three-year term loan was immediately drawn down. Gross portfolio value of the fully listed company was £1.45bn at the end of September 2022.
Aferian (LON: AFRN)
At the end of 2021, AIM-quoted Aferian secured a $50m loan facility from three banks, including Silicon Valley Bank, with potential for a further $50m and it lasts until 23 December 2024. At the end of May 202, the facility was undrawn and Aferian had net cash of $7.8m. This fell to $4m at the end of November 2022.
However, customer destocking of streaming devices has hit sales and they will be significantly lower than expected for this part of the business, although streaming video services revenues are growing. The annualised cost base is being reduced by $5m. There should still be a positive underlying EBITDA this year.
Annual results to November 2022 will be delayed while discussions with banks continue over future covenant compliance. There are no breaches of covenants yet.
Redcentric (LON: RCN)
Last June, managed services provider Redcentric secured a £100m loan facility from four banks including Silicon Valley Bank. The loan matures on 26 April. AIM-quoted Redcentric had drawn down £40m by the end of September 2022, when net debt was £39.3m. The cash was used for acquisitions. Net debt of £34.1m is forecast for March 2023. Pre-tax profit is expected to fall from £14.8m to £9.5m, before recovering to £18.7m next year.
Venture Life (LON: VLG)
In June 2021, AIM-quoted consumer healthcare products supplier Venture Life secured a £30m revolving credit facility, plus £20m accordion facility, from Santander and Silicon Valley Bank to fund further acquisitions. At the end of June 2022, £8.5m was drawn down – net debt was £3.1m. Since then, there have been further acquisition payments and net debt of £15.8m is estimated for the end of 2022, which could fall to £10m by the end of 2023 without further acquisitions.
Eagle Eye (LON: EYE)
Digital promotions and loyalty technology developer Eagle Eye secured a £5m revolving loan facility from Silicon Valley Bank, which was not drawn down at the end of June 2022. The AIM-quoted business is generating cash and net cash was £5.7m at the end of 2022. That is after a £7m placing and the acquisition of Untie Nots for an initial cash outflow of €9.1m.
eEnergy Group (LON: EAAS)
In April 2022, AIM-quoted energy-as-a-Service provider eEnergy Group secured a three-year £5m credit facility from Silicon Valley Bank. This refinanced existing borrowings. It appears that this facility has been drawn down. There was cash of £1.1m at the end of 2022.
Higher margin solar-related revenues were delayed into the second half of the financial year to June 2023. Interim revenues were 58% higher at £15.1m. Given the rate of growth, further finance is likely to be required.
Diaceutics (LON: DXRX)
Healthcare data technology services developer Diaceutics focuses on the precision medicines market. It has a £4m facility with Silicon Valley Bank, which matures on 16 July. The AIM-quoted company had no debt and cash of £19.8m at the end of 2022.
Yourgene Health (LON: YGEN)
At the beginning of 2022, AIM-quoted diagnostics firm Yourgene Healthcare entered into a three-year, £5m loan facility with Silicon Valley Bank. There was £4.1m drawn down by September 2022 when net debt was £1.7m.
A placing and retail offer raised £6.8m at 0.3p a share, after expenses. This was required for working capital and product development. That should provide the required cash for the business until at least the third quarter of 2023. Singer forecasts net debt of £2.2m by the end of March 2024. The Taiwan subsidiary is being sold and a strategic investor is being sought.
GetBusy (LON: GETB)
AIM-quoted document management and storage software developer GetBusy used to have a debt facility with Silicon Valley Bank, but this was cancelled at the end of February 2023 and replaced with a director loan facility of £2m.
PureTech (LON: PRTC)
Although fully listed and Nasdaq-quoted PureTech Health does not appear to have a direct relationship with Silicon Valley Bank, investee company Akili Interactive, a digital therapeutics developer, secured a credit facility of up to $50m in May 2021.
On Thursday and Friday, the Celadon Pharmaceuticals (LON: CEL) share price recovered strongly even though there was no news. More than 640,000 shares were traded in two days. There was more trading on Friday, than for any day since mid-January. The share price jumped 96.3% to 105p. That is the highest the share price has been since May 2022. Cannabis-based medicines developer Celadon Pharmaceuticals has a Midlands facility has been registered with the UK Medicines and Healthcare products Regulatory Agency for manufacturing its active pharmaceutical ingredient.
Amur Minerals Corporation (LON: AMC) has completed the sale of the AO Kun-Manie project in Russia to Bering Metals. The $35m consideration should be received soon. The share price recovered by 60.2% to 1.61p. A 1.8p a share dividend is planned, and Amur Minerals will become a cash shell.
Wellhead technology developer Plexus Holdings (LON: POS) has won a £5m contract for POS-GRIP wellhead equipment. This should generate £2.5m of revenues in the year to June 2023 – previously the forecast revenues for the year were £4m – with the rest recognised next year. The share price moved ahead of 31.6% to 3.75p, having been as high as 4.52p on Monday.
Tintra (LON: TNT) has entered into a new subscription agreement for $2m with a Gulf-based investor and this sparked heavy trading in the shares. This replaces an agreement that expired last year. The subscription price is 1178p and 70,742 warrants will be issued that can be exercised at 504p each if the market value of the fintech company is above $500m in the next five years. The share price has risen by one-quarter to 150p, which is a market capitalisation of £23.2m.
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Fallers
In The Style (LON: ITS) has completed a strategic review and is proposing the sale of its operating business for £1.2m and the cancellation of the AIM quotation. The online retailer is losing money and running out of cash. The purchaser is Baaj Capital, which has other fashion-related investments, including Officers Club. Chief executive and founder Adam Frisby will continue to run the business and take a stake. The company will change its name to Itsum. It floated in March 2021 and raised £11m at 200p a share, while existing shareholders raised £49m from selling their shares. An 81.6% slump in the share price to 1.3p values the company at £700,000.
Aferian (LON: AFRN) says customer destocking of streaming devices has hit sales and they will be significantly lower than expected for this part of the business. Streaming video services provider 24i continues to grow. There should still be a positive EBITDA this year. The annualised cost base is being reduced by $5m. Annual results to November 2022 will be delayed while discussions with banks continue over future covenant compliance. At the end of 2021, Aferian secured a $50m loan facility from three banks, including Silicon Valley Bank, which lasts until 23 December 2024. Max Royde, who works for 26.1% investor Kestrel is joining the board. The share price slumped 56.2% to 32p.
Alaska-focused oil and gas explorer Pantheon Resources (LON: PANR) disappointed with the flow rates from the Alkaid #2 well. It produced 505 barrels/day of liquids and 2,300mcf/day of gas. The rates improved only slightly after cleaning out the well. The share price halved early in the morning of the announcement because of investor doubts about company’s understanding of the reservoir. This could hit the terms for any farm-out. The share price is 47.6% lower on the week at 27.76p.
Semiconductor wafers manufacturer IQE (LON: IQE) says 2022 figures are in line with expectations, but weaker demand for end products means that inventory is being built up leading to reduced customer orders. Revenues are expected to decline by £30m in the first half of 2023, which is more than one-third of the total in the first half of 2022. This is a highly geared business, so there will be a large increase in the reported loss. This is a cyclical business, and the problem relates to stock levels. Longer-term prospects remain good. The share price fell by 41.9% to 27.25p.
After a morning dominated by the fallout of Silicon Valley Bank’s capital raise, markets were dealt a US jobs report that presented more questions than answers about the strength of the US economy.
The US economy added 311,000 in February, smashing estimates of 225,000. However, the US unemployment rate rose to 3.6% and wages were slightly softer.
Today’s data confirmed resilience and even strength in the US economy despite persistently high rates of inflation. While this is good news for the US economy, the higher unemployment rate and softer wage growth makes the next decision on interest rates a tough one to call. This was reflected in seesawing market moves after today’s US jobs report.
A horrible truth for markets is the Federal Reserve doesn’t need to rein in their rate hikes until the real economy starts to suffer. US CPI next week will have a big influence on whether the Fed hikes 50bps or 25bps at their next meeting.
The FTSE 100 was deep in the red before the US jobs report and remained around 1.6% down after the release.
S&P 500 futures were pointing to a higher open after finishing down heavily yesterday.
The FTSE 100’s banks were the most severely beaten down stocks on Friday, although they had recovered from their worst levels.
HSBC was trading down 5% and Barclays was down 3.8% to 157p. Barclays has traded below 154p on Friday morning.
Most FTSE 100 stocks were in the red on Friday with defensive dividend payers the only shares gaining. National Grid was 1.1% higher and BT added 0.8%.
The chaos surrounding SVB and the US jobs report has overshadowed a pleasant surprise in UK GDP growth in January. The UK economy grew 0.3% as the Premier League returned after the World Cup and more children returned to school.
However, there were warnings the good news could be short-lived and the general trend suggests further economic downside.
“The underlying trend in the economy appears to be one of gradual contraction, thanks in part to an ongoing downtrend in retail spending. We’re expecting a technical recession in the UK in the first half of this year, albeit one that’s not as bad as first feared,” said Tom Hopkins, Portfolio Manager at BRI Wealth Management.
Tintra (LON: TNT) has entered into a new subscription agreement for $2m with a Gulf-based investor. This replaces an agreement that expired last year. The subscription price is 1178p and 70,742 warrants will be issued that can be exercised at 504p each if the market value of the fintech company is above $500m. The share price has risen by one-quarter to 150p, which is a market capitalisation of £23.2m.
Neuroscience analytics IXICO (LON: IXI) has been selected to provide MRI imaging services for patients with a rare form of dementia. The gene therapy trial is expected to last four years. The share price increased by 5.43% to 24.25p.
Breedon (LON: BREE) non-exec Clive Watson acquired 29.875 shares at 76.5p each. The share price rose 3.8% to 75.15p. Aggregates and cement supplier Breedon is planning to move from AIM to a premier listing.
Sabien Technology (LON: SNT) has received a £246,000 UK government department order for M2G CO2 mitigation devices for commercial boilers. This is a repeat order. Since October, orders worth more than £430,000 have been won. The revenues will be mainly recognised in 2023. The share price is 4.06% higher at 10.25p.
Hummingbird Resources (LON: HUM) has published a new video on the progress of the Kouroussa gold mine in Guinea (Media – Hummingbird Resources Plc). There was £617,000 raised from the open offer. The share price improved 2.74% to 7.5p.
Aferian (LON: AFRN) says customer destocking of streaming devices has hit sales and they will be significantly lower than expected for this part of the business. Streaming video services provider 24i continues to grow. There should still be a positive EBITDA this year. The annualised cost base is being reduced by $5m. Annual results to November 2022 will be delayed while discussions with banks continue over future covenant compliance. Max Royde, who works for 26.1% investor Kestrel is joining the board. The share price slumped 43.8% to 34p.
Versarien (LON: VRS) chief executive Neill Ricketts has resigned. The management structure of the graphite technology developer will be assessed. Earlier in the week, a project with Costain to develop 3D printed concrete headwall was completed. This enables steel to be removed from the structure. The share price dived 35.6% to 3.2525p.
Lower trading levels on the stockmarket hit the full year figures of Cenkos Securities (LON: CNKS) with revenues 46% down at £20.3m and a move into loss. The dividend has been cut from 4.25p a share to 1.5p a share. The cash pile more than halved to £14.2m, while net assets are £21.8m. At 43.5p, down 17.1%, the market capitalisation is £29.8m.
The sale of the remaining Bonhill (LON: BONH) subsidiary has fallen through. The potential buyer of InvestmentNews significantly lowered its initial bud of $6.5m. Another US media buyer is offering $4.1m and will take on the lease of the offices in New York, which has an estimated value of $1.9m. A conditional agreement is expected. The share price fell 14.3% to 6p.
Paul Johnson is stepping down as chief executive of Power Metal Resources (LON: POW) and he will be replaced by Sean Wade. There will be a greater focus on operational activities and some projects will be spun off or floated. The share price declined by 16.3% to 0.9p.
This oil company has recently seen some interesting momentum being created in its shares, particularly with private investors.
The Isle of Man-based Petro Matad (LON:MATD) is focussed upon the exploration, development and production of oil in Mongolia.
The £47m capitalised group holds 100% working interests and is the operator of two Production Sharing Contracts with the Government of Mongolia.
The country’s leading explorer has 100% interests in production sharing contract blocks, including Ongi Block V that covers an area of approximately 7,937 sq kms; and Matad Block XX that consists of an area of approximately 218 sq kms in Mongolia.
Last month the company easily raised $6m gross @ 2.5p a share to provide funds to drill the Velociraptor prospect in Block V, which could prove transformational.
On Block XX the company is about to move ahead with completing the Heron-1 oil discovery into a production well and to start generating cash flow. Crews and equipment are ready to be brought in, while DQE is contracted for a multi-well drilling. Petro China has the ability to export crude through its nearby facilities.
The 2023 Exploration Licencing Round
The Petroleum Authority of Mongolia has a round in progress offering 14 blocks in southern half of the country. The company has an application out on one round and has identified three other blocks in subsequent 2023 rounds.
Renewable Energy possibilities
Mongolia has huge renewable energy generation potential from solar and wind projects.
The group has formed a joint venture with SunSteppe Energy, which is a Mongolian renewable energy project developer. The JV projects, ranging in size from a few tens of megawatts to hundreds of megawatts, have already been identified in solar supplied battery storage to help improve Mongolian grid efficiency and in clean energy supply to mining projects in the South Gobi region.
Analyst Opinion – a ‘potential company-maker’
Craig Howie at Shore Capital, the group’s NOMAD and Joint Broker, has an updated risked net asset value of 14.5p on the shares, against 11.5p previously.
Shore Capital rate the company’s Velociraptor-1 well as being a ‘potential company-maker’, targeting 200mmbbl.
His estimates for turnover in the 2023 year to end December are $4.68m (nil), producing a loss before tax of $2.37m ($3.27m).
For next year he has predicted a very much higher revenue of $13.87m, upon which he forecasts a $1.64m pre-tax profit.
Analyst Peter Hitchens at Progressive Research, influenced by the Velociraptor prospect, has increased his risked exploration net asset value for the shares from 29.0p to 58.7p per share.
Conclusion – an exciting ride ahead
For the time being this group is well funded and able to go about its work.
Apparently, there are plenty of opportunities in the group’s expanding oil areas of operation, while the JV on renewable energy holds interesting possibilities.
We await further news on the progress of its Heron-1 completion and into production, while its Velociraptor exploration well adding to the excitement.
A year ago, the group’s shares were 3.45p each, before peaking at 5.6p in January of this year.
Now at 4.25p they could offer patient investors an exciting ride as they inevitably increase in value, possibly even multiplying.
A small US lender focused on US tech companies and startups has sparked a sell off in global banks, including the FTSE 100’s leading banks.
SVB, or Silicon Valley Bank, set about raising capital yesterday and triggered a chain of events that left investors questioning the stability of the financial system.
SVB launched a $1.8bn placing to help cover losses in their bond portfolio. This raised concerns about the health of the bank and the possibility of a bank run. SVB themselves have called for calm.
Nonetheless, SVB shares have been destroyed in frenetic trade and major US indices suffered yesterday. The volatility spilled over into Europe’s session and the FTSE 100 tanked 2% early on Friday while the French CAC and German DAX were down around 1.5%.
The big question is around potential contagion in the international financial system and whether SVB’s issues will be limited to other smaller lenders, or if the world’s largest financial institutions will be impacted. There is no indication large banks are under any pressure at this point.
Some analysts have highlighted the ‘sell first, ask questions later’ nature of this mornings trade in Europe’s biggest banks.
Barclays was down over 8% at one point on Friday while Deutsche Bank was down nearly 10% before recovering. These are some of Europe’s largest banks and well capitalised institutions, and the move is mostly based on sentiment, rather than any immediate financial strains.
“In a heavily interconnected banking industry it’s not so easy to compartmentalise these sorts of events which often hint at vulnerabilities in the wider system. The fact SVB’s share placing has been accompanied by a fire sale of its bond portfolio raises concerns,” said AJ Bell investment director Russ Mould.
“Lots of banks hold large portfolios of bonds and rising interest rates make these less valuable – the SVB situation is a reminder that many institutions are sitting on large unrealised losses on their fixed-income holdings.”
Atlantic Lithium (LON: ALL) returned from suspension after making a statement. This was prompted by a share price fall because of a negative short-selling report on Piedmont Lithium that accused Atlantic Lithium of obtaining licences in Ghana in an underhand way. Atlantic Lithium says that the allegations in the report are not true. It bought Joy Transporters from the son of the former chairman of the Ghana mining committee, but those licences are not connected to the Ewoyaa lithium mining licence application, which is referred to in the report. Having almost halved yesterday, the share price recovered 30% to 29.375p.
Structural steel supplier Billington (LON: BILN) has sparked another upgrade with its latest trading update and the share price, up 8.57% to 380p, is back above the level it was two years ago. Not only were 2022 profit and cash better than expected, the 2023 outcome is also ahead of estimates. Margins are improving as costs stabilise and the 2022 pre-tax profit has been upgraded from £5.3m to £5.8m, while the 2023 figure is increased by £1m to £8m. The 2022 dividend is expected to be 15p a share, rising to 20p a share in 2023.
Xeros Technology Group (LON: XSG) has secured a second domestic XFilter licensing agreement with a European household appliances manufacturer. The agreement is for five years and Xeros will receive a royalty for each filter device sold. There is already an agreement with Hanning. The share price rose 6.52% to 4.9p.
Symphony Environmental (LON: SYM) says its US distributor of d2w biodegradable plastics technology has signed an exclusive supply agreement with TricorBraun for its BioBottles for the nutraceutical sector. The d2w technology can be used for bottles for other uses. The share price is 2.5% higher at 10.25p.
Semiconductor wafers manufacturer IQE (LON: IQE) says 2022 figures are in line with expectations, but weaker demand for end products means that inventory is being built up leading to reduced customer orders. Revenues are expected to decline by £30m in the first half of 2023, which is more than one-third of the total in the first half of 2022. This is a highly geared business, so there will be a large increase in the reported loss. This is a cyclical business, and the problem relates to stock levels. Longer-term prospects remain good. The share price fell by one-third to 31.125p.
Share trading business Jarvis Securities (LON: JIM) reported a fall in pre-tax profit from £7.7m to £6.4m – excluding £300,000 of one off-costs – as trading levels on the stockmarket weakened. A skilled person review is ongoing and there are restrictions on taking on new clients. Some of the wealth management clients have been removed because they do not meet risk tolerance. Onboarding procedures are being improved. Higher interest income is offsetting some of the decline in revenues. WH Ireland has trimmed its 2023 pre-tax profit forecast from £7.6m to £7m, but it has upgraded the forecast dividend from 11p a share to 12p a share. The share price fell 12.3% to 142.5p.
Synergia Energy (LON: SYN) is adopting a jet pump solution for the onshore India Cambay PSC and this could be operational in 90 days. Synergia Energy plans to farm-out 50% of the Cambay PSCThe share price is 10.2% lower at 0.11p.
Midatech Pharma (LON: MTPH) shares continue to fall following the posting a circular about its proposed share consolidation and cancellation of the AIM quotation. The share price declined 12% to 1.1p.
Ex-dividends
Brooks Macdonald (LON: BRK) is paying an interim dividend of 28p a share and the share price is 25p lower at 1885p.
Colefax Group (LON: CFX) is paying an interim dividend of 2.6p a share and the share price is unchanged at 800p.
DX (LON: DX.) is paying an interim dividend of 0.5p a share and the share price declined 0.75p to 30p.
