Zopa valuation fall hits Augmentum Fintech but other gains buoy portfolio

The peer-to-peer lender has raised £140m but at a discount to its previous valuation.

Zopa has seen its valuation fall by 47 per cent following its latest fundraise to a new money valuation of £188m.

The news comes just one day after the P2P lending pioneer secured £140m from IAG Capital Partners, owing to Augmentum Fintech, an investment trust offering exposure to a portfolio of private companies aiming to disrupt financial services, releasing its half-yearly report showing the down round.

The trust wrote down £10.3m in the value of Zopa and its share price has fallen has fallen 4.67 per cent as a result today. 

Whilst the news was disappointing for Augmentum shareholders, the trust’s managers pointed to strong growth in its other holdings in revenue terms.

Augmentum said: “Our Top 10 holdings (excluding Zopa) have seen revenue growth of over 65 per cent, such that in the period under review we have a further four investments where we are lifting the investment value. However, we do expect some bumps in the road during the development of a portfolio of fast-growing companies and recent developments in Zopa meant that we have reduced the value of this investment.”

Analysts at Liberum say the write-down in Zopa was offset by valuation increases to four of Augmentum's top 10 investments, which totalled £14.9m.

“This resulted in a net portfolio valuation gain of £4.6m in the period. The largest uplifts were to interactive investor (+£4.7m), Tide (+£4.2m), Bullion Vault (+£2.5m) and Monese (+£2.4m). These uplifts were due to strong underlying performance in the companies.” 

Augmentum's results were delayed last week whilst Zopa completed its £140m funding round, which was announced yesterday. The reduction in value reflects the rate at which the new capital was raised.

Liberum said: “The regulatory headwinds experienced by Zopa have had a significant impact on the valuation of the company. This resulted in a c.8.8p reduction in NAV per share for the period. Given Augmentum's 6.2 per cent ownership, we estimate that Zopa's valuation has decreased to just £188m following the latest funding round.” 

“Zopa only managed to secure the funding required the day before the regulator’s deadline, which meant the £140m received was based on a much lower valuation. This investment eventually came from IAG Capital, but proved to be significantly challenging, likely due to recent struggles across the peer-to-peer lending sector.”