Admission to AIM and First Day of Dealings

RNS Number : 4633M

KRM22 PLC

30 April 2018

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OR BREACH OF ANY APPLICABLE LAW.

This announcement is not an offer of securities for sale or subscription in any jurisdiction, including in or into the United States, Australia, Canada, the Republic of South Africa or Japan or any other jurisdiction where to do so might constitute a violation or breach of any applicable law. Investors should not purchase any shares referred to in this announcement except on the basis of information in the admission document (the "Admission Document") issued by KRM22 plc in connection with the proposed admission of all of its ordinary shares to AIM, a market operated by the London Stock Exchange plc ("Admission").  Copies of the Admission Document are available for inspection at www.krm22.com, subject to applicable securities laws or regulations.

30 April 2018

KRM22 plc

("KRM22" or the "Company")

Admission to Trading on AIM and First Day of Dealings

KRM22 plc, (AIM: KRM) the technology and software investment company, with a particular focus on risk management in capital markets, is pleased to announce the admission today of its Ordinary Shares to trading on the AIM Market of the London Stock Exchange ("Admission").  finnCap is acting as Nominated Adviser and Sole Broker to the Company in relation to Admission.

Highlights

·    Dealings in the ordinary shares of 10 pence each in the capital of the Company (the "Ordinary Shares") will commence at 8.00 am today under the ticker "KRM" with the ISIN GB00BFM6WC61.

·    Successful fundraising undertaken (the "Fundraise") saw strong demand from a number of institutional and private investors, raising in total £10.32 million through the issue of 10,320,239 new Ordinary Shares at a price of 100p per Ordinary Share (the "Placing Price").

·    The Company's market capitalisation on Admission, based on the Placing Price, will be £12.32 million.

·    KRM22 proposes to invest in businesses with one or more of the following criteria: market leading software offering; customer revenues; subject matter expert; capital markets focus; risk management focus and where the Board believes that there are good growth opportunities through strategic and operational advice.

·    The Company's Board and management team have many years of experience and successful track records in the software and technology industry.

Keith Todd CBE, Executive Chairman and Chief Executive Officer commented:

"We have established KRM22, as an investing company, with a long term view to provide a new generation 'Global Risk Platform' (delivered as a Software-as-a-Service offering: Risk Management as a Service ("RMaaS")) and have identified a clear opportunity to deliver significant improvements for our target customers, through our underlying investments, by providing a suite of cost effective risk management tools.

Our strategy will see us invest in companies with clear, high quality, subject matter expertise as we seek to execute our investing policy. The target and focus of our investment is risk: primarily risk in the Capital Markets which is currently poorly served by a fragmented supplier base and no one, real-time Software-as-a-Service enabled view of the true risks a business faces.

We start our journey with a strong pipeline of investment opportunities. I am excited about the opportunity to lead a great team to deliver our vision and have been overwhelmed at the support we have had from investors, partners, prospects and our KRM22 team members."

For further information please contact:

KRM 22 plc                                                                                                          via FTI Consulting LLP

Keith Todd CBE, Executive Chairman and CEO

Karen Bach, COO

finnCap Ltd (Nominated Adviser and Sole Broker)                           [phone]

Carl Holmes / Kate Bannatyne

FTI Consulting LLP                                                                                           [phone]

Emma Hall / Jamille Smith / Debbie Oluwaseyi Sonaike

 

Introduction to KRM22 plc

KRM22 is a closed-ended investment company incorporated in England and Wales on 2 March 2018. The Company has been established with the objective of creating value for its investors through the investment in, and subsequent growth and development of, target Investee Companies in the technology and software sector, with a particular focus on risk management in capital markets. The Company will be led by Keith Todd in his role as Executive Chairman and CEO, Karen Bach in her role as Chief Operating Officer and Stephen Casner in his role as KRM22 CEO USA. Together they intend to use their experience and successful track records in the software and technology industry to drive business transformation and growth from a portfolio of Investee Companies.

Investment Objective

The Company is an Investing Company and accordingly will operate in accordance with its stated investing policy (the "Investment Policy").  The Company's investment objective is to provide shareholders with total returns achieved through capital appreciation through investments in, and acquisitions of, both private and public businesses in the technology and software sector, with a focus on risk management and capital markets. 

Developing a Risk Management as a Service ("RMaaS") Global Platform

Through the investments made and in the future, the Company intends to develop a risk management platform which will be a Software as a Service offering: Risk Management as a Service ("RMaaS"). It is intended that the platform will provide a risk cockpit to CEOs, Chief Risk Officers and senior managers of customers in primarily the capital markets industry so that they can see their full risk position in real-time.

Investment Criteria

The Company will seek to achieve its investment objective through the long term investment in, or acquisition of, private and public companies. The Company intends to acquire or invest in companies that have some or all of the following features:

-      Market leading software offering: a software product used by customers;

-      Customer revenues: the business has a recurring revenue generating customer base;

-      Subject matter expert: the business founder, CEO or other key members of staff have expertise in a relevant risk management aspect or a technology;

-      Capital markets focus: the product fits into one of KRM22's four key risk domains being Market Risk, Regulatory Risk, Infrastructure Risk and Operational Risk;

-      Risk management focus: the product helps customers manage risk in one of the four risk domains identified by KRM22;

-      Acquisition price: a valuation for the deal which the Directors believe will deliver capital appreciation value for investors; and

-      Where the Board believes that there are good growth opportunities through strategic and operational guidance and providing a platform to scale.

Investment Focus: Four Key Categories of Risk

The KRM22 investment focus will be on risk management tools for all types of risks across a capital market participant's business. The Directors have identified four key risk categories or domains on which to focus: regulatory, market, technology and operational.

The Directors intend to focus the Company's first investments on the regulatory and market risk areas as this is where they have most personal experience and contacts. However, investment opportunities may arise and be executed within the technology or operational risk categories as well (if deemed appropriate and subject to adhering to the investment criteria of the Investing Policy).

The Risk Problem

Risk management involves understanding, analysing and addressing risk to make sure organisations achieve their objectives. Risks for financial institutions include fines and reputational issues from non-compliance with a multitude of increasing regulations and expanding regulatory burden and reporting standards along with operational risks when next identifying business risks.

Risk management is also taking on more prominence at board level in capital markets: According to research by Deloitte, 86 per cent. of Company boards are taking more time to manage risk than two years previously (10th Global Risk Management survey with 77 financial institutions, Deloitte's global financial services industry group).

The Directors' own experience shows that customers often have multiple risk management systems and tools with poor integration, no single real-time view, no benchmarking and with a direct result of increasing costs as a result of these inefficiencies.

The Investee Company's Customer Journey

As each new regulation is implemented, organisations tend to react to each one by adding new processes and teams and end up with increasing costs of compliance. According to research by Accenture, of 150 capital market respondents, 89 per cent. expect continued cost increases in their compliance departments over the next two years.

Global spending among banks on compliance alone reached almost $100 billion in 2016 growing year on year from 15 per cent. to 25 per cent. over four years (according to research by consulting firm Opimas). The Directors want to help the existing customers of Investee Companies and future customers of the Group solve their high cost and complexity by taking them on a journey away from costly compliance by:

-      First, minimising the Total Cost of Risk (TCR) whilst improving or at least maintaining effectiveness; and

-      Secondly, supporting "elite performance" by adding all risk factors, including financial KPIs, into a realtime cockpit.

KRM22 intends to take customers on this journey by:

-      Benchmarking the risk management activities of customers within the capital markets industry;

-      Providing the customers with an integrated real-time risk management risk cockpit on a SaaS platform; and

-      Giving to all future customers of the group access to the specialised Investee Companies' software services.

Competitive Landscape

The competitive landscape is very fragmented and the Company's own market research so far has identified 265 businesses that offer risk management software. Of these, 176 focus on capital market clients and over 50 are of interest to the Company as potential investments.

The Directors believe that the number of businesses in the sector reflects the challenge small businesses have with scaling-up. This is where the Directors intend to help through the power of scale, by bringing Investee Companies into the Group and leveraging expertise throughout the organisation.

By making investments in businesses that are experiencing and struggling against scale-up challenges, the Directors believe they can reduce some of these hurdles to help the Investee Companies scale and grow. For example, leveraging:

-      Strategic leadership, technological expertise and other skills that will be available from the senior KRM22 management team;

-      Introductions to new potential customers who are either contacts of the senior management team or existing customers of other Investee Companies;

-      Specialised resource in the Group such as a senior Cyber Security expert etc.; and

-      The credibility of an AIM-listed Group and access to public market funding.

Investment Policy

The Directors intend to use their multiple years of experience and successful track records in the software and technology industry, as well as proven managerial and business experience, to drive business transformation and growth in the Investee Companies. The Directors intend to invest and take controlling stakes in businesses (or in minority stakes) which are intended to create value for investors. It is the intention for investments to be made using cash and equity which may also include earn-out payments, subject to the Investee Company achieving certain key financial performance conditions. Investments may be made using debt where the Board concludes this is more appropriate. It is the Board's intention to keep each acquisition or investment operating independently of each other. However, the Board does intend to help each investment scale, using the expertise of the Board, as well as capitalising on cross-selling opportunities across Investee Companies customer base, deriving synergies and efficiencies by sharing technical expertise within the portfolio. Over time, the Board intends to create appropriate procedures to enhance returns by sharing some services across the Investee Companies while keeping them operationally separate.

KRM22 will have an active investment policy and the Board intends to exercise appropriate control and strategic influence over the day-to-day operational management of any Investee Company. The Board and the senior management team will provide strategic, technology and business support. In addition, at least one executive Board member or senior manager of KRM22 will be a director on the board of each Investee Company to provide strategic and corporate governance oversight.

The Company may invest or acquire globally, including emerging markets, however its short-term focus will

be on the UK, North America, Europe and Asia.

There is no set holding period for investments. However, it is the Company's intention to hold its investments on a long-term basis. The investments made by the Company may take a variety of legal forms; for example it may acquire complete control or take both a majority stake of a business or a minority stake of a business, or form a joint venture or partnership. The Company expects to raise additional external funding when required to achieve its investment objective and to make further investments.

The Company aims to provide Shareholders with an attractive total return, which is expected to comprise primarily of capital growth, although there is also the potential for distribution of income to be made throughout the Company's life. Accordingly, the Company does not currently intend to pay a regular dividend but may choose to do so from time to time as is determined to be appropriate by the Board.

Board of Directors

Thomas Keith Todd CBE ("Keith") (Executive Chairman and CEO)

Keith has 40 years of global technology business experience from publicly listed and large multi-nationals to start-up businesses. As well as being Executive Chairman and CEO of the Company, he is currently Non- Executive Chairman of AIM-listed Amino Technologies plc a provider of digital TV entertainment and cloud solutions to network operators. From 2002 to 2017 he served as Executive Chairman of FFastFill plc ("FFastFill"), provider of SaaS to the global derivatives community. Keith retained this position even after FFastFill was acquired by Ion Group in 2013. He also served as Non-executive Chairman of UK Broadband Stakeholder Group (a UK Government advisory board), Easynet PLC and Chief Executive of ICL PLC.

Karen Bach (Chief Operating Officer)

Karen is an entrepreneur and Non-Executive with strong international technology and transactional expertise. In 2012, Karen founded and was Chief Executive Officer of KalliKids and prior to this, she was Chief Financial Officer at growing technology businesses IXEurope Plc, ACS Plc and Kewill Plc. At the start of her career, Karen gained international experience in finance with blue chip multi-nationals including EDS France, MCI WorldCom, General Motors and Ernst & Young. Karen is also Non-Executive of IXCellerate, a Russian datacentre business, and of AIM listed Amino Plc, a hybrid TV and cloud solution provider and of AIM listed Escape Hunt Plc, an entertainment business based on escape rooms. She was also a trustee of the eLearning Foundation, which supports technology in education, and Non-Executive of Belvoir Lettings Plc.

Stephen Douglas Casner (CEO KRM22 USA)

Stephen has over 20 years in the industry and scale-up experience. He was co-founder and CEO of treasury management firm Hazeltree Fund Services Inc. until he stepped down in March 2017. He was also CEO of hedge fund software development company AIM-TO and CEO of IT risk management company Picasso Software Inc.

James Elliot Oliff ("Jim") (Non-Executive Director)

Jim is a highly respected financial services Board Member with over 30 years of board experience. He was on the board of NASDAQ listed CME Group Ltd (including its subsidiaries CME Clearing Europe and CME Europe) for 33 years over which he oversaw multiple key transactions and key company milestones. As well as CME, he was Deputy Chairman of AIM listed FFastFill LLC and the Chairman of its US entity for 10 years, before the company was sold in 2012. Jim is currently Chairman of FILO Corp, a consulting and derivatives brokerage business and is the former Chairman of three CME Clearing House Risk Committees.

Alexander Masson Broderick ("Sandy") (Independent Non-Executive Director)

Sandy was previously Non-Executive Director of AIM listed regulatory reporting and collateral risk management solutions company, Lombard Risk Management plc, which was recently acquired by Vermeg Group. Prior to Lombard Risk Management he was CEO of DTCC DerivSERV, where he led the roll-out of its Global Trade Repository in Europe and Asia, as well as holding the CEO position of New York Portfolio Clearing, where he oversaw its development and successful sale to ICE. During Sandy's trading career at Societe Generale and Bank of America, he was at the centre of several industry initiatives in clearing and market infrastructure, including development of the LCH Clearnet SwapClear system. Sandy was Chairman of the OTC Derivnet Board from 2011 to 2012.

David Arthur Ellis (Independent Non-Executive Director)

David is an experienced lawyer who has represented international financial institutions and corporates and has held high level in-house roles in the financial services industry. David is currently Global Head of International Legal for Tower Research Capital, a leading quantitative trading firm. Prior to Tower Research, David was Head of Legal and Compliance for Sanford C. Bernstein in London for six years, before which he was Senior Vice President and Counsel at Citigroup Global Markets, with responsibility for equities sales and trading.

Matthew Robert Reed (Independent Non-Executive Director)

Matthew serves as the Chief Operating Officer and Member of Business Growth Fund plc. Mr. Reed joined BGF at its launch in 2011 and is responsible for the finance, compliance, and the operations of the business. His role also encompasses risk and corporate governance oversight. He was previously a Director of Risk and Finance at the firm. Matthew served as a Vice President and Chief Financial Officer at CCMP Capital Advisors UK. He was responsible for the local finance department and for covering CCMP Capital's European portfolio activity and transaction execution. Prior to joining CCMP in 2006, Matthew was the Global Product Controller for Clearance and Trust products in the World Wide Securities Services business at JPMorgan Chase. He spent six years at JP Morgan, performing numerous roles, including Financial Controller positions in both Luxembourg and London. Matthew served as the Chief Financial Officer at private equity firms including, CCMP Capital Partners UK, Trilantic Capital Partners and Santander Infrastructure Capital. He is a Chartered Accountant.

Ends

 

END

 

 

MSCUBRNRWNASUAR