Molten Ventures has swooped to acquire fellow tech-focused venture capital firm Forward Partners in a £41 million deal.
Molten, listed on the main segment of the London Stock Exchange, plans to raise around £50m via a fresh share placing which will see retail investors offered the opportunity to participate.
BlackRock Investment Management UK Limited – Forward Partners’ largest shareholder – has agreed to subscribe for up to £25m worth of shares, while British Patient Capital Limited, a subsidiary of British Business Bank plc, has agreed to the conditional subscription of £10m worth of shares.
Molten CEO Martin Davis, CFO Ben Wilkinson and incoming chairman Laurence Hollingworth intend to participate in the placing. It will give the group well in excess of £100m of liquidity, including its revolving credit facility with J.P. Morgan Chase Bank and HSBC Innovation Bank Limited.
Davis said: “The proceeds of this fundraise will allow us to capitalise on attractive primary and secondary investment opportunities as the valuation environment stabilises and continue to back Europe’s most ambitious founders.
“While market conditions remain challenging, technology companies nevertheless continue to transform the industries in which they operate, and we have therefore built our platform to operate and invest through the cycle.
“Historically, of all vintages, investments made in a downturn have yielded the greatest returns for technology investors, and this fundraise reflects both the scale of our ambition to support innovation and our desire to offer investors exposure to fast-growing privately owned technology assets.”
Forward Partners, listed on the junior AIM segment in London since 2021, has been impacted by the macroeconomic headwinds since that time. Molten said its portfolio companies have been required to extend cash runways rather than invest in growth due to less certainty of capital for future fundraisings being available – resulting in downward pressure on the valuation of Forward Partners’ portfolio.
Its cash balances provide it with sufficient runway to maintain its current rate of expenses and new and follow-on investments until late 2024. Therefore it has agreed to a takeover from Molten.
On completion of the acquisition, existing Molten shareholders will hold 91.2% of the enlarged group, while Forward Partners shareholders will hold 8.8%.
“Forward Partners has a balanced and well-capitalised portfolio of 43 high-quality companies and, through combining our considerable resources, experience and networks, we will be even better placed both to support our existing portfolio companies and to capture attractive investment opportunities amid a buyer’s market for venture capital,” said Davis.
“The deal would provide Molten with a broader and more diverse pipeline through access to Forward Partners’ early-stage deal flow opportunities in fast growing sub-sectors like applied AI and digital marketplaces, and also acts as something of a homecoming for Forward Partners’ senior investment team, who are well known to us, and will bring expertise and an investment philosophy which chimes with our own in support of Europe’s most ambitious founders.”
Molten has deployed more than £1 billion of capital and realised over £500m of investments since its IPO in 2016, achieving a 30% average return per year.
Update on Wednesday 29th November: Molten raised more than £57m in the share placing.