HSBC buys SVB UK arm to avoid government intervention

UK Investor Magazine
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HSBC buys SVB UK arm to avoid government intervention

Thousands of global start-ups and technology companies were at the risk of not being able to access their accounts on Monday after the collapse of SVB last week. However, those holding accounts at the UK arm have been saved by HSBC who swooped in to secure the bank over the weekend.

SVB’s depositors at the UK arm will be relieved their cash will be available after HSBC’s £1 takeover of the bank. The move will also likely stem contagion to the rest of the banking system and prevent jobs losses at tech companies and start-ups.

“White knights are coming to the rescue after a weekend of intense negotiations to stem contagion from the SVB collapse, which sent shockwaves through financial and tech sectors.  Investors are waiting with bated breath to see if this rush of regulatory activity to try and limit the fallout from the SVB bank collapse will help soothe volatile markets and so far the bold action appears to be working,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

Nonetheless, the ‘white knights’ were unable to prevent a sharp selloff across the European equities. The banking sector was sold heavily in a risk-off trade, despite the assurances SVB depositor funds will be safe. There is no evidence larger institutions are facing the same problems as SVB.

Although the UK government claimed they facilitated the deal between HSBC and SVB, they avoided having to step in to bailout the bank with taxpayer’s money.

Jeremy Hunt should enjoy the optics of the government’s involvement in the deal ahead of his budget delivery this week.

HSBC buys SVB UK arm, Power Metal Resources and Tekcapital with Alan Green

UK Investor Magazine
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HSBC buys SVB UK arm, Power Metal Resources and Tekcapital with Alan Green

The UK Investor Magazine Podcast is joined by Alan Green as we delve into market gyrations in the wake of SVB’s failure. We also discuss a number of UK equities.

We discuss:

  • HSBC (LON:HSBA)
  • Power Metal Resources (LON:POW)
  • Tekcapital (LON:TEK)

HSBC has stepped in to buy SVB’s UK arm and provide certainty to their deposit holders. This has avoided immediate contagion but investors a still clearly uncertain about the medium term consequences as the FTSE 100 drops another 2% in early trade on Monday.

Tekcapital has announced MicroSalt has added another distributor in H Mart. H Mart will stock their SaltMe crisps.

We also look at Power Metal Resources and their change of personnel. Paul Johnson will stand down as CEO, but will remain a part of the company.

Tekcapital announces new MicroSalt partnership and confirms no SVB exposure

UK Investor Magazine
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Tekcapital announces new MicroSalt partnership and confirms no SVB exposure

Tekcapital has announced their portfolio company MicroSalt has secured a new distribution deal, and has confirmed they have no direct exposure to failed SVB.

MicroSalt’s SaltMe crisps will now be stocked in H Mart. H Mart is one the United State’s fast growing retailers and has been recognised by the National Retail and Supermarket News.

SaltMe crisps are tackling cardiovascular disease head on by providing a low-sodium alternative to a traditionally high-salt product.

“There are tens of millions of health-conscious Americans, including those suffering from high blood pressure and other cardiovascular diseases who would certainly enjoy the full saltiness of SaltMe! potato chips with approximately half the sodium found in traditional potato chips,” said MicroSalt’s CEO Rick Guiney.

SVB Confirmation

Following the failure of the tech-focused US bank Silicon Valley Bank (SVB), Tekcapital confirmed on Twitter over the weekend they held no accounts or investments with SVB.

With HSBC stepping in to buy SVB’s UK arm and the US authorities saying they will protect depositors in the US, it now appears the feared contagion has been averted.

Aquis weekly movers: Six companies with rising share prices

Andrew Hore
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Aquis weekly movers: Six companies with rising share prices

There are six Aquis Stock Exchange companies with higher share prices at the end of last week. There were four trades in Fenikso Ltd (LON: FNK) shares during the week and the last was at 0.7p, the closing share price, up 27.3% on the week.

Good Energy (LON: GOOD) confirmed that its 2022 results will be published on 28 March. The share price rose 19.7% to 197.5p, the highest level since the end of 2022.

RentGuarantor Holdings (LON: RGG) was admitted to the Apex segment of the Aquis Stock Exchange at the beginning of March and this appeared to spark some trading in the middle of last week. The share price improved by 7.5% to 215p.

Tectonic Gold (LON: TTAU) shares recovered from their recent low and were up 4.17% to 0.625p.

Interest in music artists and events company All Things Considered (LON: ATC) was prompted by the agent of the year award at the International Live Music Conference Gala Dinner. The share price was 3.23% higher at 80p.

The share price of NFT Investments (LON: NFT) edged up 2.38% to 1.075p on trading interest later in the week.

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Fallers

CBD products supplier Yooma Wellness Inc (LON: YOOM) continues to restructure its operations, but it is still trying to find a way of moving the business forward. Following the exit from many businesses, the remaining businesses are in Europe. Yooma Wellness may have to sell other businesses if additional funds are not secured. The share price slumped 53.8% to 0.75p.

Shares in Pioneer Media (LON: PNER) fell by a further 53.8% to 3p before it left the market.

Rogue Baron (LON: SHNJ) says Shinju premium Japanese whisky won a gold medal at the 2023 LA Invitational Wine and Spirits Challenge. The share price was 7.69% higher at 1.2p.

Ananda Developments (LON: ANA) is acquiring MRX Global, which has invented a method to formulate cannabis medicines, for £2.02m in shares at 0.3p each. The share price has slipped by 6.45% to 0.29p. The first formulation is MRX1, which will be used in two phase II randomised controlled trials to investigate the effectiveness of cannabidiol in chemotherapy induced peripheral neuropathy and in patients with endometriosis. These trials have £1.55m of grant funding. Directors of Ananda are shareholders in MRX, so the deal requires shareholder approval. These directors will a 3% royalty on net sales of any commercial products sold by MRX. Ananda has raised £326,000 through a subscription at 0.3p a share and there is a broker option that could lead to the issue of 33.3 million shares at the same price. Charles Morgan has converted convertible loan notes into 747.3 million shares at 0.3p each. Charles Morgan and Melissa Sturgess will own 53.8% of the company.

EPE Special Opportunities (LON: EO.P) had an NAV of 334p a share at the end of January, which was a 27% decline. The share price fell 5.26% to 180p. The decline in the Luceco (LON: LUCE) share price was a major factor behind the NAV decline even though this stake has been reduced in recent years. Rayware was another poor performer. Quoted shell company Epic Acquisition Corp is reviewing acquisitions. An investment in dog snacks company Denzel’s was completed in October. Investments in Atlantic Credit Opportunities Fund and Prelude Structured Alternatives Master Fund.

Marula Mining (LON: MARU) has appointed Peterhouse as broker, replacing OvalX. This is part of the proposed move to AIM. The hare price was 2.21% lower at 7.75p.

Invinity Energy Systems (LON: IES) has sold a 220KWh VS3 flow battery to Dawsongroup, following a sale earlier in the year. STS Group and project partner Ideona have been appointed to deploy Invinity Energy batteries in Hungary, primarily for co-located solar and grid support projects.  The share price edged 1.59% lower at 31p.

Town Centre discount

Andrew Hore
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Town Centre discount

Town Centre Securities (LON: TOWN) continues to trade at a significant discount to net tangible assets, even though they declined in the six months to December 2022.
The valuation of the portfolio fell by 7% over six months, which was much better than the market benchmark, which fell by 17.5% due to the tough property market and higher interest rates. Net assets are 314p a share, while underlying net tangible assets are 306p a share, down 8%. The tender offer using disposal proceeds from the stake in the YourParkingSpace app helped to keep up the net tangible assets for each share.
Cash genera...

Vietnam Holding Investor Presentation March 2023

UK Investor Magazine
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Vietnam Holding Investor Presentation March 2023

Vietnam Holding presents at the UK Investor Magazine Virtual Investment Trust Conference March 2023.

Download Presentation Slides Here.

Vietnam Holding (LON:VNH) invests in high-growth companies in Vietnam, focusing on domestic consumption, industrialisation and urbanisation. Craig Martin, Chairman of Dynam Capital, the manager of Vietnam Holding, presents at the Virtual Investment Trust Conference March 2023.

abrdn Private Equity Opportunities Presentation March 2023

UK Investor Magazine
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abrdn Private Equity Opportunities Presentation March 2023

abrdn Private Equity Opportunities presents at the UK Investor Magazine Virtual Investment Trust Conference March 2023.

Download Presentation Slides Here.

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.

Temple Bar Investment Trust Presentation March 2023

UK Investor Magazine
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Temple Bar Investment Trust Presentation March 2023

The Temple Bar Investment Trust presents at the UK Investor Magazine Virtual Investment Trust Conference March 2023.

Download Presentation Slides Here.

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 Investor Presentation March 2023

UK Investor Magazine
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HydrogenOne Capital Investor Presentation March 2023

HydrogenOne Capital presents at the UK Investor Magazine Virtual Investment Trust Conference March 2023.

Download Presentation Slides Here.

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.

UK companies that have relationships with Silicon Valley Bank

Andrew Hore
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UK companies that have relationships with Silicon Valley Bank

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.

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