FastForward Innovations Ltd, the AIM quoted company focusing on making investments in fast growing and industry leading businesses, announces that it is today seeking general authority from shareholders for an update to the Company’s Investing Policy (the ‘Proposed Investing Policy’) and to increase the Company’s authority to issue further new Ordinary Shares.
A circular in which full details of the proposals are set out (the ‘Circular’), together with the Form of Proxy and a notice of an Extraordinary General Meeting to be held at 11 New Street, St Peter Port, Guernsey, GY1 2PF on 13 July 2020 at 4pm, have today been posted to shareholders and published on the Company’s website: www.fstfwd.co .
Whilst not a dramatic shift from the existing policy adopted in July 2015, in light of the recent changes to the board of the Company, the Directors believe they will have greater flexibility and the ability to generate shorter term returns for shareholders by adopting a more balanced portfolio approach in regard to the maturity of the companies they invest in. The primary sectors of focus remain the same as do the operational jurisdictions and the Directors believe that the current investment portfolio still fits within the Proposed Investing Policy.
In addition to seeking shareholder approval, the Directors are seeking an approval to increase the Company’s authorised share capital. At the AGM held in October 2019, nominal authority was sought only for the issue of up to 10% of the issued capital of the Company in order to issue shares under the share option programme of the Company (if required). The Directors believe this would be insufficient were it to need to raise further funds to make additional investments when also taking into account the working capital requirements of the Company. Therefore, in order to give the Company maximum flexibility in implementing its Proposed Investing Policy it is seeking shareholder approval to issue up to 100% of the current issued share capital.
As the Company is nearly fully invested, in order to make further investments and take advantage of opportunities available to it, it would either need to sell down investments which may not be strategically advantageous or raise further funds through the placing of new Ordinary Shares utilising such proceeds for new or further investments. Being granted the authorities sought will give the Company flexibility to do this.
Proposed Investing Policy
The Board proposes to invest in companies which, in normal circumstances, individual retail investors may have limited access to.
Investments sought will be in sectors which have, or have the potential for, significant intellectual property, principally in the wellness and life sciences sectors (including biotech, longevity of life and pharmaceuticals) along with aligned technology sectors (including artificial intelligence and digital delivery). Equally the Board will consider investments in established industries where the business is applying new technologies and/or ‘know how’ to enhance its offering or taking established business models or products to new markets. In keeping with its desire to provide its shareholders with access to investments they may otherwise not be able to participate in, the Board also intends to apply a portion of the portfolio to opportunistic investments which may, by exception, fall outside the above criteria but represent good potential for short term returns. Such investments will be limited at 15% of the Company’s NAV and would typically be in fundraisings by listed companies or as part of an IPO.
Initially the geographical focus will be North America and Europe, but investments may also be considered in other regions to the extent that the Board considers that valuable opportunities exist and positive returns can be achieved.
In selecting investment opportunities, the Board will focus on businesses, assets and/or projects that are available at attractive valuations and hold opportunities to unlock embedded value. In line with the existing portfolio it is expected that investments will be in SMEs with sub £100m valuations but with the potential for significant growth. Where appropriate, the Board may seek to invest in businesses where it may influence the business at a board level, add its expertise to the management of the business, and utilise its industry relationships and access to finance. The extent that the Company will be a passive or active shareholder will depend on the interest held and the maturity of the investee company.
The Company’s interests in a proposed investment and/or acquisition will range from minority positions to full ownership and will comprise multiple investments. The proposed investments may be in either quoted or unquoted companies; are likely to be made by direct acquisitions or investments; and may be in companies, partnerships, earn-in joint ventures, debt or other loan structures, joint ventures or direct or indirect interests in assets or businesses.
The Company will pursue a balanced portfolio of an even mixture of early stage, pre-liquidity event and liquid investments which it will aim to hold within the portfolio for 2-4 years, 6-24 months and up to 12 months respectively. Whilst the target is to have the portfolio split fairly evenly between the different stages of liquidity there will be no set criteria for which the Company will hold an investment and the proportion of the portfolio which will be represented by each investment type.
There is no limit on the number of projects into which the Company may invest. The Directors intend to mitigate risk by appropriate due diligence and transaction analysis. The Board considers that as investments are made, and new promising investment opportunities arise, further funding of the Company may also be required.
Where the Company builds a portfolio of related assets it is possible that there may be cross holdings between such assets. The Company does not currently intend to fund any investments with debt or other borrowings but may do so if appropriate. Investments are expected to be mainly in the form of equity, with debt potentially being raised later to fund the development of such assets. Investments in later stage assets are more likely to include an element of debt to equity gearing. The Board may also offer new Ordinary Shares by way of consideration as well as or in lieu of cash, thereby helping to preserve the Company’s cash for working capital and as a reserve against unforeseen contingencies including, for example, delays in collecting accounts receivable, unexpected changes in the economic environment and operational problems.
The Board will conduct initial due diligence appraisals of potential businesses or projects and, where it believes that further investigation is warranted, it intends to appoint appropriately qualified persons to assist. The Board believes it has a broad range of contacts through which it is likely to identify various opportunities which may prove suitable. The Board believes its expertise will enable it to determine quickly which opportunities could be viable and so progress quickly to formal due diligence. The Company will not have a separate investment manager. The Board proposes to carry out a comprehensive and thorough project review process in which all material aspects of a potential project or business will be subject to rigorous due diligence, as appropriate. Due to the nature of the sectors in which the Company is focused it is unlikely that cash returns will be made in the short to medium term on the majority of its portfolio; rather the Company expects a focus on capital returns over the medium to long term.
In preparing the Proposed Investing Policy, the Directors have given consideration to their individual and collective expertise in respect of the policy. Taking into account their experience with the existing portfolio based on the current investing policy (which as noted is not materially different to the Proposed Investing Policy), as well as advising, raising funds for and investing in multiple SMEs throughout their careers, the Board believes it has sufficient experience and expertise to implement the Proposed Investing Policy on behalf of shareholders. Please refer to the Board’s biographies as contained on the Company’s website, https://fstfwd.co/ .
Currently, the Company publishes its Net Asset Value (NAV) on a half yearly basis, within the Interim and Annual Reports. Between these dates, its policy is to update investors on material developments within its portfolio companies which could have an impact on the value of the Company’s interest in that portfolio company and expects this will continue under the Proposed Investing Policy.
In the event the Proposed Investing Policy is not approved by shareholders then the existing investing policy will continue to be in effect.
A comparison of the proposed changes against the current investment policy is included in Appendix A of the Circular.
Recommendation and Importance of the Vote
The Board considers that the Resolutions are in the best interests of the Company and its Shareholders as a whole.
Accordingly, the Directors would recommend that all Shareholders vote in favour of the Resolutions and it is confirmed that the Directors holding 1,774,024 shares in aggregate have confirmed their intention to vote in favour of the resolutions. In addition the Company has received irrevocable undertakings to vote in favour of the Resolutions to be proposed at the EGM from Jim Mellon, Galloway Limited (indirectly wholly owned by Jim Mellon) and Lorne Abony in respect of a total aggregate of 31,126,933 Ordinary Shares which represents 19.3% of the issued ordinary share capital as at the date of this announcement.
Shareholders must complete the Form of Proxy in accordance with the instructions printed thereon. To be valid, completed forms of proxy must be returned by post or hand to, the Company’s Secretary, Vistra Fund Services (Guernsey) Limited, 11 New Street, St Peter Port, Guernsey, GY1 3EG so as to arrive as soon as possible, and in any event not later than 4 p.m. on 9 July 2020, (or, in the case of an adjournment of the General Meeting, not later than 48 hours before the time fixed for the holding of the adjourned meeting (excluding any part of a day that is not a Business Day)).
In view of the restrictions placed upon travel, the limits on the size of gatherings and the social distancing measures required as a result of the Covid-19 pandemic, the general meeting will be run as a closed meeting and shareholders will not be able to attend in person. Shareholders are encouraged to appoint the chair of the meeting as their proxy rather than a named person, or multiple named persons, who will not be allowed to attend the meeting.
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.
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