Strategy & Portfolio
Capital markets generally and institutional equity investors are more focused on large deals in mature companies, with smaller growth companies representing a much smaller allocation of investment funds.
Across global stock exchanges, there are a substantial number of small listed companies that find it difficult to access growth capital.
Capital available for smaller transactions has become scarce and traditional finance
- has become less flexible
- has become more risk adverse
- requires a minimum transaction size
- is time consuming as in depth analysis is required to properly understand a company’s needs and assess risks.
For institutional investors, it can be challenging to deploy equity capital in junior companies due to their size.
However, junior companies can provide outstanding returns when they can access the required capital to liberate value
RiverFort Global Opportunities:
- is focused on filling this junior company funding gap – less funding competition presents attractive return opportunities
- will seek to secure superior downside protection by focusing on investing in companies using convertible, mezzanine, senior debt, and royalty/long term income instruments
- can help institutional investors gain exposure to junior companies by providing an investment company that can offer scale and credit-backed exposure to the junior sector.
The Company believes that there is a real opportunity to become a “merchant bank” to junior companies across a number of sectors, combining proprietary capital and structuring skills to create bespoke solutions.
The principal focus will be on investments of US$3 million to 10 million on a syndicated basis
Cash interest, fees, trading profits and other income streams earned are expected to form the basis of the return to shareholders by way of an attractive dividend yield and capital growth.
RiverFort Global Opportunities plc is seeking to invest capital principally through:
- structured equity investment instruments
- bridge loans
- revolving loan facilities
- convertible, mezzanine and senior debt
- royalty/long term income instruments
- project finance instruments
The structure of these investments provides downside protection, reduced volatility but with attractive levels of investment income. In addition, it is often possible as part of making such an investment to secure equity upside through the grant of warrants in the underlying investee company.
As announced on 14 December 2018, RiverFort Global Opportunities plc has provided funding of around £3.1 million to private and publicly-traded companies listed on AIM, TSX/V and ASX which include the companies set out below. Investment returns comprise income in the form of fees and interest and performance upside that includes instruments such as warrants, conversion rights, royalty streams and operationally linked income streams.
|Jubilee Metals Group plc||Project finance secured loan||Yes||No|
|Amur Minerals plc||Convertible loan||Yes||Yes|
|EQTEC PLC||Secured mezzanine loan||Yes||Yes|
|Lions Bay Capital Inc||Loan secured on a portfolio of investments||Yes||Yes|
|Linkwood Holdings Limited||Secured short term loan||Yes||Yes|
|Artemis Resources Limited||Convertible loan||Yes||Yes|
|AIM listed oil and gas company||Mezzanine loan||Yes||Yes|
|AIM listed mining company||Secured loan||Yes||No|
|AIM listed mining company||Revolving loan facility||Yes||Yes|
Certain companies have not been named due to confidentiality restrictions.
In order to source and structure such investments, RiverFort Global Opportunities plc works closely with its investment adviser, RiverFort Global Capital Limited, who also provides certain infrastructure and monitoring services in relation to the investments that are made.
Investments by RiverFort Global Opportunities plc can be made either by directly contracting with the company concerned or by way of participation in a linked financial instruments that provides similar economic benefits to the holder as if they were co-investing directly in the underlying investment.
RiverFort Global Opportunities plc has a small portfolio of equity investments, principally in the natural resources sector. Exposure to this type of investment has, however, been reduced such that as at 30 June 2018, the Company had around £1.9 million invested in equities which has since reduced further so that this portfolio now represents less than half of the Company’s overall portfolio. Within this portfolio, the Company’s principal investments comprise Plutus PowerGen plc and Pires Investments plc. The Company’s current strategy is to work strategically with these investments in order to maximise long term value.