Sale of assets

RNS Number : 7837K

Spark Ventures PLC

21 April 2015

 

SPARK Ventures plc

("SPARK" or the "Company")

21 April 2015

Sale of assets

SPARK Ventures plc, the early stage technology investment company, announces that it has signed a definitive agreement to sell all the remaining portfolio investments, excluding IMImobile ("IMI") and the stake in Quester Venture Partnership, to Hollyport Secondary Opportunities IV Unit Trust ("Hollyport") for a minimum aggregate consideration of approximately £3.7m (0.9p per ordinary share) which would be increased should certain events happen relating to some of the assets  before 31 December 2015. This represents a maximum aggregate discount of approximately 20% to the September 2014 investment values (the last reported valuations). The investments sold that had a September 2014 valuation in excess of £0.5m include Compliance Online (formerly Gambling Compliance), DEM Solutions, Academia and my Deco.

Together with the successful flotation of IMI in June 2014, this now means that SPARK has largely concluded the strategy announced at the time of the restructure and MBO in 2009, since when shareholders have already received total returns of £54m or 13p per share.

The Board of SPARK anticipate that the completion of various transfer provisions will take several months to complete, and cash proceeds will come in to SPARK over that period. 

SPARK's preliminary results for the year to 31 March  2015 are expected to be announced in July 2015. At this time SPARK will provide a further update to shareholders covering the completion of these asset sales, progress made regarding its 17.8% holding in IMI and an update on the future strategic direction of SPARK.

As a consequence of both this transaction with Hollyport and the fact that the listed IMI shares remain subject to the customary 12 month lock-up restrictions until 27 June 2015, the investing policy of SPARK has been changed to remove the date to which the investing policy applied of 31 March 2015.  SPARK's revised investing policy is therefore:

• Make no more investments into new businesses from its own balance sheet resources and seek to realise its Remaining Investments, subject to abiding by the orderly market and lock-up provisions relating to IMI. 

• Return surplus cash to Shareholders arising from its cash reserves, from the completion of the Hollyport sale process and from the realisation of its Remaining Investments.

However, the following additional policies remain in place:

·     To only make further investments into the Remaining Investments.

·     To actively manage the Remaining Investments where the Directors consider to do so will enhance Shareholder value.

·     Not to leverage any of the Remaining Investments.

As a consequence, as the sales of investments to Hollyport progress the Company's portfolio will become more concentrated.   The "Remaining Investments" refers to the Company's 17.8% stake in IMI, its 0.5% stake in Quester Venture Partnership, together with stakes in any other investment that, despite the current agreement to sell them to Hollyport, do not complete for any reason.

To support the completion of these asset sales and other matters, SPARK has agreed terms with SPARK Venture Management Ltd (the "Manager"), to continue to manage the Company.

The Company's existing management arrangements expired on 31st March 2015. Accordingly, the Company has sought and agreed terms to renew such agreement on similar terms and will therefore enter into a new management agreement (the "Management Agreement") pursuant to which the Manager will continue to be responsible, subject to the overall supervision of the Company, for managing SPARK's remaining investments and for completing the Hollyport sale process.

In consideration for its services under the Management Agreement, the Company shall pay:-

·      a Management Fee of £100,000 per quarter, for Administration Services and Investment Management Services (as defined in the Management Agreement) subject to a 3 month notice period; and

·      an incentive payment, in the event of the successful disposal of SPARK's investment in IMI of a sum equal to a maximum of 20% of the cash profit realised for such shareholding.

The incentive payment referred to above is not a new incentive but is a re-iteration of the incentive payment arrangements in place for the year to 31 March 2015. The IPO of IMI was the key performance achievement that triggers an incentive payment, but no payment is actually due until the shares in IMI have been sold or distributed. An estimate of the likely liability arising from this incentive scheme was made in the adjusted NAV per share as disclosed in the Interim Report for the six months to 30 September 2014.

The entry into the Management Agreement will constitute a related party transaction for the purpose of the AIM Rules for Companies. The independent Directors of the Company not associated with the Manager, being David Potter, Charles Berry and Helen Sinclair, having consulted with the Company's nominated adviser, finnCap, consider the terms of the Management Agreement to be fair and reasonable insofar as the Shareholders are concerned.

Hollyport Secondary Opportunities IV Unit Trust is a Jersey based secondary private equity investment vehicle managed by Hollyport Capital. Based in London, Hollyport has been acquiring and managing mature private equity assets since 2006 and has significant experience in transferring and managing direct investments. Hollyport will work closely with SPARK and its manager to achieve the transfer of the investments over the coming months.

For further information please contact:

SPARK Ventures plc	Andrew Betton / David Potter	07540 725 100
finnCap	Matt Goode / Christopher Raggett	020 7220 0500
Attila Consultants	Charles Cook / Nita Shah	020 7947 4489

 

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