In this inaugural edition, we are pleased to present a comprehensive update on the recently merged Mobeus VCTs, as well as highlighting data technology as an emerging thematic opportunity that is capturing the attention of growth capital. The newsletter includes an overview of the portfolio and its performance. We trust you will find this issue both informative and insightful. Should you have any questions or feedback regarding the Mobeus VCTs, please do not hesitate to contact our team
Recent exits and new and follow-on investments
Recent exits
In February 2024, the Mobeus VCTs exited their stake in logistics, warehousing and removals business Master Removers Group (MRG). Over the nine-year holding period, the Mobeus VCTs generated a money multiple of 3.4x and an IRR of 26.6%.
New and follow-on investments
To date in 2024, over £15.2 million of new and followon investments have been made across the Mobeus VCTs, including new investments into OnSecurity and SciLeads and follow-on investments into MyTutor, ActiveNav, Dayrize and Orri.
Latest news
Mobeus VCT merger completion
Shareholder approval for the Merger, as outlined in the Circular dated 18 June 2024, was obtained during the General Meetings on 18 and 26 July 2024. As a result, Mobeus Income & Growth 2 VCT plc (MIG2) and Mobeus Income & Growth 4 VCT plc (MIG4) were placed into liquidation, with their assets transferred to Mobeus Income & Growth VCT plc (MIG) and The Income & Growth VCT plc (I&G) respectively.
Share certificates in MIG and I&G were issued on or around 10 August 2024 to shareholders in MIG2 and MIG4.
The Subscription Offers for MIG and I&G were contingent on the Merger’s approval. Following approval, these offers will be available for applications starting at 9:00am on Monday, 2 September 2024.
Fundraising update
As a result of the Merger being implemented the offers for subscription to raise, in aggregate, up to £70 million (with an over-allotment facility to raise up to, in aggregate, a further £20 million) launched by the companies will open for subscription on Monday 2 September 2024.
Performance and portfolio overview
Over the past six months, the Net Asset Values (NAVs) per share across the MIG and I&G VCTs have demonstrated a positive trajectory, reflecting an increase in portfolio company valuations. Notably, over 65% of the portfolio recorded profit increases compared to the previous year, emphasising the effectiveness of portfolio company boards in reprioritising growth and accelerating paths to profitability.
From 31 December to 30 June, MIG achieved a NAV total return of 1.9%, MIG2 reported 0.8%, MIG4 recorded 1.5%, and I&G delivered 1.9%, resulting in an overall combined NAV total return of 1.6%. These results highlight the portfolio’s resilience and strong growth potential.
NAV at 30 June 2024
Capital at risk. Past performance is not a reliable indicator of future performance.
NAV at 30 June 2024 - funds now in voluntary liquidation
Outlook
Geo-political flux and economic uncertainty are anticipated to persist throughout 2024, impacting sectors and businesses to varying extents. However, we expect this environment to present compelling opportunities for skilled investors with a long-term perspective. While current economic conditions may moderate short-term growth within existing portfolio companies, they also create potential for further strategic investments. In uncertain markets, the expertise of seasoned investment managers will be indispensable. Our experienced team is well-placed to navigate these challenges, deliver growth, and capitalise on opportunities.
Recent dividend payments
Dividend payments in 2024
MIG: 4p on 31 May 2024 and I&G: 3p on 7 June 2024.
Following the approval of the Merger, both Boards have determined that it is appropriate for the Companies to adopt an annual dividend target set as a percentage of NAV per share, rather than a fixed pence per share amount. Consequently, the new annual dividend target for both VCTs will now be 7% of the NAV per Share at the start of the relevant financial year. This updated target will be applicable from the 18 July 2024.
Target returns are not guaranteed. Capital at risk.
Portfolio insight
MPB is the UK’s largest dedicated online marketplace for used photographic equipment. With locations in Brighton, New York and Berlin, their proprietary technology manages the end-to-end experience for users buying, selling, or trading second-hand kit.
In this video Matthew Mead, Venture Partner, outlines what the team look for in a portfolio company and we hear from Matt Barker, CEO & Founder of MPB about the origins of the business, its growth and expansion and the important support the Gresham House Ventures team provides.
New investment spotlight
In this video, Trevor Hope, Managing Director of VCTs, highlights a new investment in Ozone API.
Ozone API empowers banks and financial institutions to adapt and thrive in the new world of open data, by providing the technology to unlock the power of open finance and change the world.
The UK-based fintech provides the leading standards-based open API platform, supporting all global standards and providing the tools and expertise to help banks and financial institutions create real commercial value.
We led a £8.5 million investment round in open banking platform Ozone API in December 2023.
Unlocking the potential of data for enterprises and investors
Businesses of all sizes need help to manage the challenge of their data - and those innovative enterprises that are able to help them do so have huge investment appeal, observes Gresham House Venture’s James Hendry.
From improving the understanding of customers and their behaviours, to driving automation and operational efficiencies, to harnessing the power of AI, the data revolution promises so much for enterprises. Organisations of all sizes recognise the potential of data, however, many are struggling to capture the opportunity.
Digital transformation budgets are increasing in businesses of all sizes and across sectors, however recent research by the Harvard Business Review shows that improved usage of data has been below expectation and progress may have stalled, even at very large businesses with substantial technology budgets.
The stakes are high. More data than ever is being generated. In 2023, the world generated approximately three times the volume of data produced in 2019, and this figure is forecast to grow by 25% CAGR to 2030. Moreover, the use cases for data continue to multiply; digital transformation touches every pillar of modern organisations.
Against this backdrop, there are significant opportunities for investors. For companies whose raison d’etre is to enable enterprises and users to better collect, augment, interpret and manage their data, there will be opportunities for continued growth over the coming decades as they support their clients to better harness their data.
The Gresham House Ventures team has made investments and continues to actively look for investment opportunities in this area, and views the issues faced by these companies’ clients as fitting within at least one of three categories:
1 Poor data infrastructure: While data is plentiful, many organisations struggle to collect, share and manage data quickly and with a high level of accuracy. Where there are concerns about data quality, projects struggle for impact.
2 Inability to generate insights: Interpreting data can be complex and often requires specialists. Software can help, however this is also a people challenge. The current shortage of data scientists globally is forecast to grow, creating opportunities for specialist data consultancies and training providers.
3 Lack of access to high-quality, specialist data: Many organisations lack access to the rich datasets they need to optimise their use cases. Curating specialist data on an ongoing basis is impractical for most due to cost, in addition to potentially lacking market access.
Within data infrastructure, Gresham House Ventures has invested into OzoneAPI, a software platform that enables banks and financial institutions to securely share information in a low-cost, compliant manner. Ozone’s platform allows its customers to comply with, and to generate revenue opportunities, from Open Banking / Finance regulation which is experiencing significant growth globally.
Gresham House Ventures’ portfolio company ActiveNav, which provides data privacy and governance software, enables its customers to better manage their data and to discover unstructured data within their organisation. As data volumes increase and data protection laws evolve, the imperative to protect data grows as organisations acknowledge that breaches expose them to significant risk.
Capital at risk. Past performance is not a reliable indicator of future performance.
Our investments into Bidnamic and CitySwift are also examples of investments into software platforms that provide customers with insight into critical parts of their organisation. Bidnamic, a machine learning platform which helps customers optimise their Google shopping spend, supports clients to drive increased revenue and improved profitability through its automated data insight platform. CitySwift’s proprietary software enables public transport network providers to optimise their asset usage, and to thereby significantly improve revenue and profitability.
Across the data provision space, Gresham House Ventures have invested into SciLeads and Airfinity
Both of these businesses provide customers with high-quality, specialist datasets which are curated on an ongoing basis. Airfinity provides high-quality data on infectious diseases, as well as tools that help customers to understand, predict and act on emerging research. SciLeads enables organisations who sell to biotech, pharma and academia to identify prospects, significantly improving sales efficiency.
Conclusion
While the use cases for data will continue to evolve over the coming decades, the ability to utilise data effectively will become increasingly crucial. Companies that can provide the necessary tools and expertise to overcome common challenges stand to gain significantly. For investors, this presents a significant opportunity to generate returns from a long-term trend.
By identifying and backing these innovative businesses, investors can not only achieve attractive returns but can also contribute to the next wave of technological advancement and productivity gains.
Article written by
James Hendry Investment Director
James joined Gresham House Ventures as Investment Manager in December 2019, before being promoted to Investment Director in 2024.
He is primarily focused on making new investments into fast growing software businesses focused on process automation, data and analytics, or cyber security. He led the investment in OzoneAPI and Fu3e and is on the board of SecureCloud+.
Prior to joining the team, he spent five years at PwC, latterly working in the financial due diligence team.
He is a Chartered Accountant (ICAEW) and holds an MA in Economics and Accounting from The University of Edinburgh.
Portfolio
Useful documents
Half-year reports - June 2023 Mobeus Income & Growth VCT plc
Annual report and accountsDecember 2023
The Income & Growth VCT plc
Half-year reports - March 2024
Income & Growth VCT plc
The Income & Growth VCT plc
Annual report and accountsSeptember 2023
Useful documents - funds now in voluntary liquidation
Mobeus Income & Growth 2 VCT plc
Interim report and financial statementsSeptember 2023
Mobeus Income & Growth 4 VCT plc
Annual report and accountsDecember 2023
Mobeus Income & Growth 2 VCT plc
Annual report and financial statementsMarch 2023
Mobeus Income & Growth 4 VCT plc
Interim report - June 2023
Company spotlights
ActiveNav
(follow-on investment, May 2024)
ActiveNav develops and sells enterprise software to medium and large businesses, enabling data mapping across their IT estates to allow the management of data policies, including redundancy, freedom of information, privacy and security. In addition, the company has developed an immediate cyber-attack response service where its Discovery software platform (’DC’) identifies sensitive information taken by hackers after a breach. More recently, they have established a new services division, Actfore, which has been highly successful, and the group as a whole is of meaningful scale and cash generative.
The VCTs have invested a total of £12.7mn (£5mn - Nov 2019, £1.4mn - Dec 2021, £6.3mn – May 2024) to support the further expansion of the sales & marketing resource of DC, develop and launch ActiveNav’s cloud offering, and to support the working capital requirements of the Actfore managed services division.
Post our initial investment in November 2019, ActiveNav has evolved three market offerings from two operating divisions, growing revenues c.2x from £6mn to £12mn, creating 39 new highly skilled jobs over the same period.
Portfolio investments in smaller companies typically involves a higher degree of risk. Investments investment strategy and are not investment recommendations.
OnSecurity (new investment, May 2024)
OnSecurity is a B2B cybersecurity business providing independent third-party penetration testing (“pentest”) services, a type of ethical hacking that simulates a realworld attack on a computer system, network, or web application to identify and remediate vulnerabilities that could be exploited by malicious actors.
OnSecurity is a trusted and well-known provider with an excellent reputation in the market (4.9/5 rating on G2, a peer-to-peer business service review platform). This is a technology enabled people services business that utilises bespoke technology that has been built ground up for pentesting service delivery, compared to industry incumbents that are reliant on more manual processes.
In June 2024, we invested £3mn to support new customer acquisition, further developing and leveraging their existing technology platform to grow EBITDA.
Contact details
Chris Elliott
Managing Director, Wholesale
M: +44 (0) 78279 20066
E: c.elliott@greshamhouse.com
Andy Gibb
Sales Director
M: +44 (0) 78490 88033
E: a.gibb@greshamhouse.com
Rees Whiteley
Sales Manager
M: +44 (0) 75975 79438
E: r.whiteley@greshamhouse.com
Source for all information is Gresham House unless otherwise stated.
Risks to be aware of
The value of the Mobeus VCTs and the income from them is not guaranteed and may fall as well as rise
As your capital is at risk you may get back less than you originally invested
Past performance is not a reliable indicator of future performance
Any tax reliefs are dependent on your individual circumstances and may be subject to change
Funds investing in smaller, younger companies may carry a higher degree of risk than funds investing in larger, more established companies. Investments in smaller companies may be less liquid than investments in larger companies
Important information
This document is a financial promotion issued by Gresham House Asset Management Limited (Gresham House) as Investment Manager for Gresham House plc under Section 21 of the Financial Services and Markets Act 2000. Gresham House is authorised and regulated by the Financial Conduct Authority with reference number 682776 and has its registered office at 5 New Street Square, London EC4A 3TW. The information in this document should not be construed as an invitation, offer, solicitation of any offer, or recommendation to buy or sell investments, shares or securities or an invitation to apply for securities in any jurisdiction where such an offer or invitation is unlawful, or in which the person making such an offer is not qualified to do so. Whilst the information in this document has been published in good faith, Gresham House provides no guarantees, representations, warranties or other assurances (express or implied) regarding the accuracy or completeness of this information. Gresham House and its affiliates assume no liability or responsibility and owe no duty of care for any consequences of any person acting in reliance on the information contained in this document or for any decision based on it. Past performance is not a reliable indicator of how the investment will perform in the future. Your capital is at risk. Prospective investors should seek their own independent financial, tax, legal and other advice before making a decision to invest. This document has not been submitted to or approved by the securities regulatory authority of any state or jurisdiction. This document is intended for distribution in the United Kingdom only. Any dissemination or unauthorised use of this document by any person or entity is strictly prohibited. Please contact a member of the Gresham House team if you wish to discuss your investment or provide feedback on this document. Gresham House is committed to meeting the needs and expectations of all stakeholders and welcomes any suggestions to improve its service delivery.
