EIGHT CAPITAL PARTNERS IS AN INVESTMENT COMPANY WHICH INTENDS TO INVEST IN OTHER BUSINESSES
It’s fair to say that Eight Capital Partners’ antecedent structure, Cogenpower plc., had a bumpy start in life. Listed on AIM, Cogenpower, an alternative energy group, became a cash shell when it sold its Cogenpower business in December 2017, temporarily re branding as Monreal plc.
Cogenpower was liquidated but that had nothing to do with the current directors of Eight Capital, who took over following the liquidation and who argue that they changed Cogenpower to take the new business forward in a way that is positive for the company and its shareholders. It changed its name to Eight Capital Partners in August, following a move to NEX Exchange, took on a new Chairman, and announced that it was now focusing on investments in technology, media, telecoms and financial services. Most important of all though was a recapitalisation, raising a maximum of £2.5 million in the form of Convertible Bonds. Eight Capital’s first material investment was to acquire 29.7% of Imaginatik by investing £250,000 in the company.
Imaginatik has been around since 1994; it’s a clever company that provides innovation software for managements, but has been going through its own difficult period. For Dominic White, Eight Capital’s new Chairman, there was one obvious question: why should anyone invest in a business which has had such a rocky recent history? “The past is no indication of the future,” he immediately says. “When the company was left as an AIM shell it was required, by the rules of the exchange, to do a reverse takeover by a specified time, which it didn’t do. So it became a new business. All the old parts have gone. The old management has gone. I came into the business with a few new shareholders and we set everything to zero and it’s going in a new direction with new people.”
White says, quite correctly, that there are some advantages to starting a new business within an existing shell, rather than starting something entirely fresh. “It’s quite helpful to have an existing diversified shareholder base. It can be quicker to get going – within days we had a listed company, the bank accounts are there, the registrations are there, everything is there. Equally, there are advantages to starting from scratch, but you have to put all that in place and you are at least three months away from doing something. Whereas if you can get into something that already exists and is ‘clean’, you can do it in days.”
Dominic White Executive Chairman
As for the name, White explains that eight is both a lucky number and it’s the perfect symbol for infinity, indicating that Eight Capital is an ongoing and continuous investment vehicle and not a closed fund. Eight Capital Partners is an investment company which intends to invest in other businesses and create a portfolio. “In this initial phase,” says White, “we are focusing on technology and financial services. We have made a small investment in Finance Partners Group” (an Italian financial services company) “and Imaginatik. We are value investors – we are all about getting involved in consolidating sectors, to bring together companies and improve efficiency and therefore profits. So we are looking at two or three other financial services companies in which to make investments, putting together a couple of sub-scale fund managers to create scale. In technology, Imaginatik had got itself into difficulty. It lost its nominated advisor, not through any wrong doing but through a series of unfortunate circumstances. We believe in their underlying business; they have some great clients, good turnover, and they have a new chief executive who is known for successfully restructuring businesses.
EIGHT CAPITAL'S IMMEDIATE ASPIRATIONS ARE TO RAISE FURTHER CAPITAL AT AN EVER-INCREASING PRICE
The Italian-speaking White has had a 25- year career in private equity management across many sectors. Although he has worked in both large and small business has tended to focus on breaking into new sectors and, as he puts it, “opening new things”. Eight Capital Partners should play to his acquired skills and experience, as well as his fresh energy. “Generally my approach is to get involved in small businesses, bringing in capital partners, sourcing and executing M&A transactions, aligning myself with them – so I invest in them – and growing the businesses,” says White.
As we approach the end of our conversation I return to my initial question, putting it more bluntly – why should anyone buy shares in Eight Capital Partners? “Because they are very cheap and there is a massive future! If you look at our market cap today, it’s tiny, but if you look beyond that, and see the number of shares we have bought in Imaginatik, you will see that the value of what we own is several times the value of the shares in Eight Capital.
That’s why I will certainly be buying as many as I can.” Eight Capital’s immediate aspirations are to raise further capital at an ever-increasing price and to “create a lot of value quickly for shareholders,” says White.
Before he goes, I ask him how he is getting along with NEX Exchange. “One of the things I like about NEX Exchange already is that there appears to be an ability to dialogue with the exchange, which is something that’s different from other exchanges; it’s very difficult to have that dialogue with other exchanges. It makes for a much more positive relationship. It’s perfect for the type of company we are, it’s perfect for the smaller companies that are on NEX Exchange, because by definition we are in a growth phase. We’re tiny, but we want to be £10, £20, £30 million and to get there we have got to do M&A activity and raise money and do a whole bunch of transactional stuff. On other exchanges it can get very complicated and tricky. When you can explain directly to your exchange partner what you are doing and why and how you are getting there it’s extremely helpful, rather than having to do everything at arms’ length, which is how a whole lot of other exchanges work.”
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