The board believes that the significant increase in the size of the gross assets of the company may enable it to significantly strengthen its balance sheet and further increase the equity value of ECP
(), the investment company, has acquired €40mln of 2.5% fixed rate secured bonds from IWEP Limited.
IWEP is a company controlled by Eight Capital’s chair, Dominic White.
The bonds have been purchased for €150,684, representing the par value of the bonds plus accrued (but unpaid) interest.
The bonds, which were issued by The Avantgarde Group SpA (TAG), have a redemption date of 30 June 2024 and carry a potential equity-linked payment at redemption that gives bondholders the opportunity to participate in the performance of the underlying security package.
Interest due on the bonds can be paid in cash or listed securities, to an equivalent value. Eight Capital (ECP) understands that it is the intention of TAG to list the bonds on a European stock exchange in due course.
Consideration for the acquisition of the bonds, including the accrued, unpaid interest, has been settled by a one-year vendor loan (at an interest rate of 1.5% a year) as approved by shareholders at the annual general meeting earlier this month.
“This transaction affords a much stronger base from which ECP can further develop as a technology-led growth company focussed on financial services, fintech, decentralised finance and banking technology. It also increases shareholder value by significantly enhancing gross asset value together with the potential for an equity performance-linked payment at bond redemption,” said Dominic White.
“We have been developing a deep-value investment model over several years that involves using securities and transaction structure to deliver attractive business acquisitions and combinations, that target asymmetrical returns for shareholders. Together with enhancing the team quality and operations of acquired companies, this can result in outsized investment returns to shareholders.
“We expect that ECP will begin to take shape and grow more rapidly following this first step. We will be nurturing earnings potential and structuring for further growth in our operating subsidiaries, and upcoming investments,” White said.
“We believe that our ability to invest in private and public debt and equity, as well as own operating companies and passive investments, gives us a competitive advantage and high levels of structuring flexibility that can help to maximise returns. We have a great pipeline of opportunities that we intend to deliver through this business model in the coming 24 months,” White concluded.