Venture capital firm Molten Ventures PLC (LSE:GROW) has raised £55.0 million via a placing and subscription share issue, with a retail offer via the PrimaryBid platform expected to close later today, as it acquires Forward Partners Group PLC.
The placing and subscription, which closed yesterday at a price of 270p, and PrimaryBid offer of up to 1.11 million more shares at the same price, due to close at 3pm today, are subject to shareholder approval at a meeting on 14 December.
With Molton agreeing to buy Forward in an all-share deal, chief executive Martin Davis said the new funds would be was used to support existing portfolio companies and invest in new ones.
"The proceeds of this fundraise will allow us to capitalise on attractive primary and secondary investment opportunities as the valuation environment stabilises," said Davis.
He added that "historically, of all vintages, investments made in a downturn have yielded the greatest returns for technology investors".
It is the second time that Molten, which has been an investor in PrimaryBid since February 2022, has used PrimaryBid to include retail investors in its fundraising, while PrimaryBid was also used by Forward Partners to include retail investors in its 2021 IPO.
Deal rationale
Molten said there is a "strong strategic and financial rationale" for the acquisition with the venture capital market hit by the rising interest rates and macroeconomic instability in the past 18 months, which has resulted in the brakes being put on deal timelines with fundraising, exits and new investments taking longer to complete due to increased levels of due diligence.
While these conditions are seen as likely to exist for "at least the short- to mid-term", it said this has thrown up some opportunities for secondary transactions, such as this deal.
Molton said Forward Partners "has a well-balanced portfolio across the venture capital life cycle, focused on fast-growing sub-sectors that are aligned to both Molten's origination focus as well as current market trends, such as applied AI, alternative assets and digital marketplaces", with its portfolio weighted average revenue growth of 133% across its top 15 core holdings in the first half of 2023.
More than 70% of the companies in the top 15 core holdings were already profitable, had cash runway of at least 18 months, or were anticipated to reach break-even without further fundraising, according to Forward's management.
"As part of the enlarged Molten group, the Molten board believes there is an opportunity for Forward Partners' portfolio companies to continue current growth trajectories and accelerate value creation."
Forward's top 15 portfolio holdings by value are Gravity Sketch, Robin, Spoke, OutThink, Ably, Makers, Apexx, Juno, Snaptrip, Breedr, KoruKids, Plyable, Counting Up, Up Learn and SpotQA Virtuoso.
Molten's 17 core portfolio companies are Aircall, Aiven, CoachHub, Endomag, FintechOS, Form3, Graphcore, Hive MQ, Iceye, Isar Aerospace, Ledger, M-Files, PrimaryBid, RavenPack, Revolut, Schüttflix and Thought Machine.