Forward Partners portfolio value narrows as it winds down Advances

Technology-focussed investment firm Forward Partners said in an update on Wednesday that it expected its half-year ventures portfolio value to be at least £92m, including £6.3m in new investments.

The AIM-traded firm said that would represent a decline of 26.4% exclusive of new investments, as it has previously flagged.

Its net asset value per share was expected to be at least 83.4p, of which cash per share was set to total 16.8p per share.

Looking at its portfolio, Forward Partners said valuation headwinds from the decline in share prices at high-growth tech stocks were the primary driver of the drop in its ventures portfolio value.

It said the performance of the underlying portfolio remained strong, with average forecast revenue growth of the top 15 investments by fair value of 40% to 60% for the full year.

Over 80% of the top 15 investments were expected to be “on the path to break even” without the need for further fundraising, or have sufficient resources to negate the need for fundraising for 18 months or more.

It added that £6.3m of investments were made in the period, including 12 follow-on investments totalling £4.9m, and new investments in two high-growth, early-stage technology companies - Baselime and Sonrai - totalling £1.4m.

The company’s top 15 portfolio investments accounted for 69% of venture portfolio value, with the most valuable company accounting for 9.8%.

Investment in the top 15 to date totalled £25.8m, with 61.7% of the portfolio consisting of business-to-business companies.

“The group has decided to conduct a managed wind down of its subsidiary Forward Partners Venture Advance,” the board said in its statement.

“The start-up venture was established in 2020 to meet the demand of the fast-growing alternative funding market, separate to venture capital.

“Since then, it has originated £14.9m, aiding consumer-focused e-commerce companies to increase revenues through short term unsecured funding.”

Forward Partners said it was continually reviewing its business against its primary objective to create long-term sustainable shareholder value, and judged that the current macroeconomic environment and the low margins necessary for Advance to compete in the alternative funding market had “limited opportunities” for future growth.

“Consequently, the managed wind down of Advances' operations will commence from today.

“While no further funding will be originated or made, current Advances customers will be fully serviced for the duration of their contracts.”

In the year ended 31 December 2021, Advances generated revenues of £0.37m, and recorded losses after tax of £1.1m, with total originations of £9.5m.

Advances book value as at 30 June was expected to be £1.9m, while repayments from outstanding Advances remained in line with forecasts, and costs in the current financial year, including wind-down costs, were forecast to be £2.8m.

“The group will use the capital conserved to support Ventures in investing into new technology businesses with strong fundamentals and existing portfolio companies that we know and trust.

“Our forecasts show that a managed wind down of Advances will reduce operating costs and, over time, strengthen the group's balance sheet.”

At 1203 BST, shares in Forward Partners Group were flat at 46p.

Reporting by Josh White at Sharecast.com.