Eight Capital Partners acquires InnFin
Investing company Eight Capital Partners Plc today announces the acquisition of financial services business, Innovative Finance Srl (InnFin). ECP will pay an initial €2.45 million with a further potential earn-out of up €2.45 million based on the achievement of financial performance targets. It also announces a Term Loan to the company of €1.1 million.
The ECP board has been reviewing a number of investment opportunities within the financial services sector and recognises that those engaged in “Fintech” operations, the digitisation of banking services, through to blockchain-backed decentralised finance companies and crypto banks, are revolutionising the way that customers interface with financial services.
Within the existing strategy ECP is therefore re-energising its focus on financial services investments with particular attention being paid to fintech, financial services, banking digitisation and crypto banking themes.
As part of this focus, ECP has agreed to acquire InnFin, a corporate finance advisory business that develops mergers and acquisitions and financing solutions across multiple sectors, primarily in Europe, with access to international transactions. It is currently working on transactions in the USA, Switzerland and Italy which are linked to technological developments in the financial services industry, such as fintech payment service platforms and conversion of a traditional banking entity into a digitised “bank of the future”.
The ECP board considers these to be key growth areas as noted above and therefore believes that the investment in InnFin aligns well with its investment strategy for financial services and technology businesses.
ECP intends to create a supervisory board at InnFin and all of its wholly owned subsidiaries such that it has oversight capability and can cross-fertilise ideas, capital and deal flow across the portfolio. The Boards will consist of ECP members and independents.
Whilst ECP retained an option to acquire 60% of InnFin (the “Option Agreement”), details of which were announced on 27 July 2020, the Board decided it would better further ECP’s strategy by acquiring the entire business. As a result, ECP has agreed to acquire 100% of InnFin for an initial consideration of €2.45m reflecting its ability to contribute directly to delivering the Company’s growth Themes, current business levels, and pre-identified pipeline of upcoming transactions.
A potential earn-out payment of a further €2.45m could become payable, subject to InnFin achieving agreed EBITDA levels over the next three years. The projected total EBITDA across the three year period is greater than the total potential consideration.
If these performance targets are not met, the potential earn-out does not become payable. If the targets are achieved, the earn-out can be paid in cash or shares at the Company’s election. The initial purchase consideration will be settled by the payment of €1m in cash, €328,700 of vendor loan at a 5% interest rate accruing for 24 months (“IF Vendor Loan”), £62,000 (€71,300 at an exchange rate of £1:€1.15) in shares of Eight Capital (“Consideration Shares”) issued at 0.039p (being the 360 day Volume Weighted Average Price) which equates to 155,388,471 shares, the offset of €350,000 that is owed to Eight Capital by the vendor as part of the Option Agreement, and €700,000 of the Company’s listed bonds.
The Consideration Shares will be issued to Concreta Srl, which, on admission of the shares to trading on AQSE, will be interested in 9.9 per cent. of the Company’s enlarged issued share capital. As a result of a further issue of the Company’s listed bond as partial consideration for InnFin the Company will have a total of €3,990,000 bonds outstanding.