KRM22 PLC (AIM:KRM), the technology and software investment company, said 7RIDGE Investments is to pump roughly £4.7mln into the company.
7RIDGE has conditionally agreed to subscribe for up to 8.9mln KRM22 shares at 53p a pop. KRM22 shares closed at 32p on Friday.
The subscription agreement is conditional on a number of things, including the negotiation and execution of a distribution agreement between KRM22 and Trading Technologies International (TT), a company that 7RIDGE has conditionally agreed to acquire.
TT is a provider of software as a service (SaaS)-based services for capital markets companies.
Following completion of the acquisition by 7RIDGE of TT, Keith Todd will give up the role of chief executive officer (CEO) of KRM22 to become CEO of TT, although he will remain the executive chairman of KRM22. Stephen Casner, president of KRM22, is lined up to become the new CEO of KRM22.
KRM22 said the relationship with TT will not be exclusive and it will continue to explore opportunities with other partners. KRM22 described the hook-up with TT as “a significant opportunity for KRM22 to target TT's customer base that spans over 1,000 firms including nearly all of the major tier one banks”.
The distribution agreement will start with the company's Market Risk products and can expand to the company's full suite of risk products.
In an update on current trading, KRM22 said trading in the second half of the fiscal year had been similar to the first half, with the company expecting similar levels or revenue and underlying earnings (EBITDA); as such, this would represent a performance below current expectations.
The company expects to achieve full-year revenue of £4.3mln, annual recurring revenue of at least £4.0mln and an adjusted underlying loss of £0.6mln.
KRM22 revealed that a significant contract with a tier-one bank that was on the verge of being signed had been paused; the contract is now not expected to be inked before fiscal 2023.
“Despite this, the sales pipeline remains strong, and with the proposed TT distribution agreement, FY 2022 forecasts remain positive and the company expects growth on FY 2021,” the company’s trading update said.
Todd said the agreement with TT would significantly improve the group’s growth potential.
“Trading Technologies is a leading provider of SaaS-based services for capital markets companies and is complementary to KRM22's SaaS-based risk offerings. Stephen and I have known each other for twenty years and have proven to work effectively since KRM22 was formed. The transition of roles, to the extent undertaken in accordance with our current expectations, will be smooth and my new role at Trading Technologies would be complementary to KRM22,” Todd said.
“The outlook for KRM22 over the next few years will be improved by this transaction and will provide the capital that the company needs,” Todd said.