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Augmentum Fintech takes a hit on investment in Zopa

Augmentum Fintech has revealed a cut in its valuation of Zopa, taking a write-down on its 6.2% stake in the company of £10.3 million. Augmentum Fintech is the UK’s only publicly listed investment company focusing on the fintech sector, investing in early and later stage fast growing fintech businesses that are disrupting the banking, insurance, asset management and wider financial services sectors.

The write-down on Zopa came in the company’s interim results for the six months ending 30 September 2019, which showed upward valuations of £14.9 million offset by a decrease in the valuation of Zopa leaving an overall gain on investments of £4.6 million.

Neil England, Chairman of Augmentum Fintech noted the reduction in the valuation of Zopa reflected the pricing of the latter’s regulatory investment round to support the application for a banking licence. Augmentum Fintech delayed publication of its results pending confirmation of the Zopa investment.

England added, in his chairman’s statement: “…we remain confident in the long term success of this business which has a materially different business model to several other large peer to peer lenders.”

Previously, Augmentum Fintech’s stake in Zopa had been valued at £21.9 million in August 2018. Now the investment is said to be worth just £11.7 million (equivalent to 11.5% of Augmentum Fintech’s overall portfolio and still its third largest investment).

Augmentum Fintech noted that against a backdrop of Brexit, UK political instability and a poor performing listed peer in Funding Circle (which has seen a 79% fall in its share price since IPO), it had “not seen the valuation appreciation that was anticipated…”

However, the statement added, “There has been significant investor interest in Zopa, many of whom asked for the opportunity to conduct due diligence once there was more economic and political stability in the UK… Our view of the company’s prospects has not changed and… we believe it will still deliver a compelling return over time.”

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