Draper Esprit plc
("Draper Esprit", "the Company" or "the Group")
Expansion of Management Team: Director Appointment
Trading Update
Draper Esprit (AIM: GROW, ESM: GRW), a leading venture capital firm investing in high‐growth digital technology businesses, announces the expansion of its management team and trading update ahead of its interim results for the period ended 30 September 2019 on 26 November.
Management team expansion: Director Appointment
Following a period of significant development since Draper Esprit's successful 2016 IPO, the Group today announces an addition to its senior leadership team to support further growth.
Following a rigorous and wide-ranging selection process, Martin Davis joins the Company today as Chief Executive Officer, while current CEO and co-Founder Simon Cook will become Chief Investment Officer.
Together with Stuart Chapman, co-Founder and Chief Operating Officer, and Ben Wilkinson, Chief Financial Officer, the enhanced senior leadership team will continue to implement the Company's strategy of providing investors with access to the best private technology companies in Europe, further democratising venture capital for shareholders while empowering entrepreneurs to invent the future.
Martin has more than 20 years' experience in financial services and technology and was most recently CEO of investment management business Kames Capital.
Prior to joining Kames, he was CEO at Cofunds, the largest adviser platform for financial intermediaries in the market, which he joined after eight years at Zurich Insurance Group, where he ran the International and Global Emerging Markets life businesses. He was also CEO of Zurich's joint venture, Openwork, a network of financial advice firms.
Prior to this, Martin held senior management roles at fintech business Misys, online banking business Corillian and data business Reuters. He was originally an officer in the Royal Irish Rangers.
In his role as Chief Investment Officer, Simon Cook will lead the investment team, continuing to seek out fast growing, private digital technology businesses with global potential from across Europe, in line with the Company's decade long track record of generating 20%+ net returns.
Further disclosures in relation to Mr Davis' appointment in accordance with paragraph (g) of Schedule Two of the AIM and Euronext Growth Rules for Companies are set out below.
Trading update
The positive momentum has continued in the past six months with progress achieved across all areas of the business. The Group continues to see on target growth within its portfolio through revenue increases, financing rounds and exits, alongside a healthy pipeline of investment opportunities. As a result, trading remains in line with our stated financial objective of a 20% increase in the portfolio fair value per annum.
As a consequence of the portfolio companies' growth during the period, combined with further realisations in the portfolio, the Directors anticipate that the gross portfolio value will have increased to approximately £683 million, up 15% from £594 million at 31 March 2019 (93% from £354 million at 30 September 2018). The increase in the value of the gross primary portfolio reflects further investments made during the period of £42 million (£203 million during the 12 months ended September 2019).
A fair value increase of £70 million in the six months ended 30 September 2019 (£162 million fair value increase for the 12 months ended 30 September 2019) has been primarily driven by the continued positive performance across the portfolio combined with financing rounds led by third parties at higher valuations. FX contributions have also had a positive impact.
The core portfolio is anticipated to consist of 18 companies which in aggregate represent 70% of the fair value of the total portfolio. The average characteristics of the core companies reflect: revenue growth of 56% to over $120m in 2019, gross margins of over 60% and Draper Esprit holds an average equity stake in the core companies of over 9.0% with the average fair value for each of £27 million. These characteristics are indicative of an average enterprise value of approx. 3.0 x forecast 2019 revenues which we believe to be prudent.
Due to prevailing market headwinds and ongoing political uncertainty, we have maintained a prudent investment pace, investing £42 million in the period across new and existing portfolio companies.
|
Six months ended 30th September 2018 (unaudited) |
Six months ended 31st March 2019 (audited) |
Six months ended 30th September 2019 (unaudited) |
|
£'million |
£'million |
£'million |
Gross Portfolio Value beginning of period |
244 |
354 |
594 |
Investments |
64 |
161 |
42 |
Realisations |
(2) |
(13) |
(23) |
Movement in Fair Value |
48 |
92 |
70 |
Gross Portfolio Value at period end |
354 |
594 |
683 |
% Change in Gross Portfolio Value |
45% |
68% |
15% |
% Change in Fair Value |
20% |
26% |
12% |
During the period, we also generated £23 million from the partial sales of our stakes in Transferwise, UiPath and Codility, alongside proceeds from escrows of previous sales.
Plc cash at the period-end was £46 million with a further £50 million available to deploy within EIS/VCT co-investment funds. Along with the revolving debt facility we secured in May 2019, the Group has £126 million of investment capacity, affording the business a high degree of financial flexibility when assessing future investment opportunities.
AIM and Euronext Growth Rule disclosures
The Company makes the following disclosures in relation to Mr Davis' appointment in accordance with paragraph (g) of Schedule Two of the AIM and the Euronext Growth Rules for Companies:
1. Director's full name: Martin Michael Arthur Davis
Director's age: 57 years
2 Other directorships/partnerships held during the last five years:
Kames Capital plc Kames Capital Management Limited Kames Capital Holdings Limited Aegon Asset Management (NL) Aegon Asset Management (Asia) [Aegon Corporate Services Limited Aegon UK Services Limited La Banque Postale Asset Management (Fra) |
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|
|
Mr Davis is no longer a director of any of these companies.
3. Shareholding: Mr Davis does not hold any shares in the Company.
4. Other information: There is no other information required to be disclosed in relation to Mr Davis under paragraph (g) of Schedule Two of the AIM and Euronext Growth Rules for Companies.
Karen Slatford, Chairman, said;
"Martin brings extremely relevant experience and strategic thinking at large companies within the Financial Services sector, as well as in emerging technology companies. His appointment and Simon's new role as CIO will build on the momentum evident in our continued strong performance and add firepower as we seek to scale our business further. Trading has remained in line with the guidance we gave at our AGM and we are once again set to deliver the stated objective of a portfolio return of 20% per annum for the full year."
Martin Davis said;
Draper Esprit's reputation for helping high quality technology companies is unparalleled and I look forward to working with Simon and the wider team as I focus on building the infrastructure to accelerate the growth of the business. With companies staying private for longer, our role in helping to democratise venture capital and provide our shareholders with access to high growth technology companies is more important now than ever before. Generating value for our shareholders while helping the very best entrepreneurs to secure the right capital to grow their businesses is central to this approach, and I am tremendously excited to be joining Draper Esprit to lead the team in the next stage of our development."
Simon Cook added;
"We often advise our companies that they need additional management skills for new phases of growth so it's only fitting that we follow our own advice. Investing in technology startups is my great passion and I am excited by the prospect of focusing on our investment activity in depth as CIO. Now is a good time to enhance our management team to build on our status as Europe's most active in the venture capital asset class. Martin's unique experience in both technology and building highly scalable financial services companies will help enable us to scale Draper Esprit to reach new heights."
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Enquiries
Draper Esprit plc Martin Davis (Chief Executive Officer) Simon Cook (Chief Investment Officer) Ben Wilkinson (Chief Financial Officer) |
+44 (0)20 7931 8800 |
Numis Securities Nominated Adviser & Joint Broker Alex Ham Richard Thomas Jamie Loughborough |
+44 (0)20 7260 1000 |
Goodbody Stockbrokers Euronext Growth Adviser & Joint Broker Don Harrington Charlotte Craigie Dearbhla Gallagher |
+44 (0) 20 3841 6202 |
Powerscourt +44 (0)20 7250 1446
Public relations
Elly Williamson
Jessica Hodgson
Jack Shelly
