Molten Ventures, the Dublin- and London-listed tech investment company formerly known as Draper Esprit, has agreed to buy smaller UK peer Forward Partners in a stock-based deal valued at £41.4 million (€47.7m) as it seeks to take advantage of challenging market conditions in the venture capital sector.
Molten also said in a statement on Monday that it raised £55 million in a share sale to provide the enlarged group with resources to commit follow-on cash to companies in which it is invested. Forward Partners’s largest shareholder, US investment giant BlackRock, committed to buy almost half of the new stock that was issued.
Forward Partners, which backs early-stage technology businesses, floated on London’s junior stock market with an initial market value of almost £135 million. However, its market capitalisation had fallen to £45.1 million by the close of trading last week. Molten has a market value of about €447 million.
Molten is paying a 7.3 per cent discount to Forward Partners’s 33.5 pence closing price on Friday. Molten’s equity raise is being priced at a 3.4 per cent discount to its own closing price last week.
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Over the past 18 months the wider venture market has faced ongoing pressures driven by continued global macroeconomic instability, high levels of inflation and rising interest rates.
Molten has over the past six months continued to see extended deal timelines with fundraising, investment exits and new investments taking longer to complete due to increased levels of due diligence. The company has also been helping portfolio companies to preserve cash, become more efficient and set out paths to profitability.
“This period of market dislocation and depressed valuations has given rise to a number of opportunities for secondary transactions, including the acquisition,” Molten said. “Forward Partners has a well-balanced portfolio across the venture capital life cycle, focused on fast-growing sub-sectors that are aligned to both Molten’s origination focus as well as current market trends, such as applied AI, alternative assets and digital marketplaces.”
Forward Partners’ top 15 core holdings had cash runway of at least 18 months, or were anticipated to reach break-even without further fundraising or were already profitable, Molten said.
“As part of the enlarged Molten group the Molten board believes there is an opportunity for Forward Partners’ portfolio companies to continue current growth trajectories and accelerate value-creation,” Molten said.
Key Forward Partners investments include stakes in 3D design software company Gravity Sketch, legal technology firm Robin and cybersecurity specialist OutThink.
