Flow Capital Corp (TSXV:FW) (“Flow Capital” or “Flow”) reports on
its investment performance over the 5-year period from March 2018,
when the formation of Flow was first announced.
Key highlights:
- Invested $46 million
into 16 portfolio companies
- Achieved IRR of
30.5% on capital deployed
- Recorded Loss Ratio
of 0.7%
- Increased Book Value
Per Share by 172%; from a low of $0.45/share1 at Q4, 2019, to
$1.23/share at Q1 2023
- Generated positive
EBITDA and Free Cash Flow for the past 3 years
- Repurchased 13.6M
(~31%)2 of the outstanding common shares at a weighted average of
48%3 discount to book value.
Details of Flow’s investment performance since March
2018*
|
# of Investments |
Capital Invested |
Capital Returned |
Value Remaining |
IRR |
Loss Ratio*** |
Investments where debt has been repaid |
8 |
$15.5M |
$23.9M |
$2.6M** |
42.9 |
% |
2.2 |
% |
Currently Active Investments |
8 |
$30.5M |
$9.9M |
$32.7M |
22.60 |
% |
0 |
|
Totals |
16 |
$46M |
$33.8M |
$35.4M |
30.50 |
% |
0.70 |
% |
* Data in the table above covers the period of new investments
from March 2018 and includes all payments, fees, and equity gains
until April 2023.** Could include warrants and other equity-like
bonuses. Warrant values are calculated using Black-Scholes pricing
and are not increased unless there is an external equity financing
event.*** Loss ratios calculated based on total capital deployed in
the category.
On March 11, 2018, LOGiQ Asset Management Inc.
(“LOGiQ”) and Grenville Strategic Royalty Corp. (“Grenville”)
entered into a business combination agreement as a plan of
arrangement, under the Business Corporations Act (British Columbia)
(the “BCBCA”). The combined entity was subsequently renamed Flow
Capital Corp.
Since that time, Flow has transitioned its
business away from perpetual royalties and mutual fund asset
management, to focus exclusively on Venture Debt investing, or more
specifically, investing in senior secured debt instruments, in
high-growth (primarily technology) companies, with equity
upside.
“These returns have been generated from
investments in companies that have passed a highly selective
process designed to identify the most attractive risk/reward
trade-off. Only the best companies get through Flow’s rigorous
screening process,” said Alex Baluta, CEO of Flow
“As new investments are made, we expect
aggregate returns could dip in the shorter term until such time as
new equity exits are realized from portfolio companies which
achieve a liquidity event and our equity exposure upside is
realized. The higher returns are evident in the investments which
have already fully or partially exited,” continued Mr. Baluta.
“Recent market dynamics have created an
environment in which the demand for Flow Capital’s funding has
grown dramatically. Deal flow has accelerated in recent months, and
it is our expectation that much more capital will be deployed into
more great growth companies at a faster rate,” said Mr. Baluta.
“Flow helps growth companies scale their
business with covenant light, minimally dilutive funding, while
taking debt-like risk and generating equity-like returns for our
shareholders. These 5 year returns demonstrate the capability of
our approach in generating significant returns for our
stakeholder,” summarized Mr. Baluta.
About
Flow Capital
Flow Capital Corp. is a diversified alternative
asset investor and advisor, specializing in providing minimally
dilutive capital to high growth businesses primarily in the
technology sector. To apply for financing, visit
www.flowcap.com.
For further information, please contact:
Flow Capital Corp.Alex
BalutaChief Executive Officeralex@flowcap.com
1 Adelaide Street East, Suite 3002,PO Box 171,Toronto, Ontario
M5C 2V9
Forward-Looking Information and
Statements
This press release contains certain
“forward-looking information” within the meaning of applicable
Canadian securities legislation and may also contain statements
that may constitute “forward-looking statements” within the meaning
of the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995. Such forward-looking information and
forward-looking statements are not representative of historical
facts or information or current condition, but instead represent
only the Company’s beliefs regarding future events, plans or
objectives, many of which, by their nature, are inherently
uncertain and outside of the Company’s control. Generally, such
forward-looking information or forward-looking statements can be
identified by the use of forward-looking terminology such as
“plans”, “expects” or “does not expect”, “is expected”, “budget”,
“scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or
“does not anticipate”, or “believes”, or variations of such words
and phrases or may contain statements that certain actions, events
or results “may”, “could”, “would”, “might” or “will be taken”,
“will continue”, “will occur” or “will be achieved”. The
forward-looking information contained herein may include, but is
not limited to, information with respect to: prospective financial
performance; including the Company’s opinion regarding the current
and future performance of its portfolio, expenses and operations;
anticipated cash needs and need for additional financing;
anticipated funding sources; future growth plans; royalty
acquisition targets and proposed or completed royalty transactions;
estimated operating costs; estimated market drivers and demand;
business prospects and strategy; anticipated trends and challenges
in the Company’s business and the markets in which it operates; the
amount and timing of the payment of dividends by the Company; and
the Company’s financial position. By identifying such information
and statements in this manner, the Company is alerting the reader
that such information and statements are subject to known and
unknown risks, uncertainties and other factors that may cause the
actual results, level of activity, performance or achievements of
the Company to be materially different from those expressed or
implied by such information and statements.
An investment in securities of the Company is
speculative and subject to a number of risks including, without
limitation, risks relating to: the need for additional financing;
the relative speculative and illiquid nature of an investment in
the Company; the volatility of the Company’s share price; the
Company’s limited operating history; the Company’s ability to
generate sufficient revenues; the Company’s ability to manage
future growth; the limited diversification in the Company’s
existing investments; the Company’s ability to negotiate additional
royalty purchases from new investee companies; the Company’s
dependence on the operations, assets and financial health of its
investee companies; the Company’s limited ability to exercise
control or direction over investee companies; potential defaults by
investee companies and the unsecured nature of the Company’s
investments; the Company’s ability to enforce on any default by an
investee company; competition with other investment entities; tax
matters, including the potential impact of the Foreign Account Tax
Compliance Act on the Company; the potential impact of the Company
being classified as a Passive Foreign Investment Company (“PFIC”);
the Company’s ability to pay dividends in the future and the timing
and amount of those dividends; reliance on key personnel,
particularly the Company’s founders; dilution of shareholders’
interest through future financings; and general economic and
political conditions; as well as the risks discuss ed in the joint
management information circular of the Company dated May 2, 2018
and the risks discussed herein. Although the Company has attempted
to identify important factors that could cause actual results to
differ materially from those contained in the forward- looking
information and forward-looking statements, there may be other
factors that cause results not to be as anticipated, estimated or
intended.
In connection with the forward-looking
information and forward-looking statements contained in this press
release, the Company has made certain assumptions. Assumptions
about the performance of the Canadian and U.S. economies over the
next 24 months and how that will affect the Company’s business and
its ability to identify and close new opportunities with new
investees are material factors that the Company considered when
setting its strategic priorities and objectives, and its outlook
for its business.
Key assumptions include, but are not limited to:
assumptions that the Canadian and U.S. economies relevant to the
Company’s investment focus will remain relatively stable over the
next 12 to 24 months; that interest rates will not increase
dramatically over the next 12 to 24 months; that the Company’s
existing investees will continue to make royalty payments to the
Company as and when required; that the businesses of the Company’s
investees will not experience material negative results; that the
Company will continue to grow its portfolio in a manner similar to
what has already been established; that tax rates and tax laws will
not change significantly in Canada and the U.S.; that more small to
medium private and public companies will continue to require access
to alternative sources of capital; that the Company will have the
ability to raise required equity and/or debt financing on
acceptable terms; and that the Company will have sufficient free
cash flow to pay dividends. The Company has also assumed that
access to the capital markets will remain relatively stable, that
the capital markets will perform with normal levels of volatility
and that the Canadian dollar will not have a high amount of
volatility relative to the U.S. dollar. In determining expectations
for economic growth, the Company primarily considers historical
economic data provided by the Canadian and U.S. governments and
their agencies. Although the Company believes that the assumptions
and factors used in preparing, and the expectations contained in,
the forward- looking information and statements are reasonable,
undue reliance should not be placed on such information and
statements, and no assurance or guarantee can be given that such
forward-looking information and statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such information and
statements.
The forward-looking information and
forward-looking statements contained in this PRESS RELEASE are made
as of the date of this PRESS RELEASE, and the Company does not
undertake to update any forward-looking information and/or
forward-looking statements that are contained or referenced herein,
except in accordance with applicable securities laws. All
subsequent written and oral forward- looking information and
statements attributable to the Company or persons acting on its
behalf is expressly qualified in its entirety by this notice.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
1 Includes the impact of the de-recognition of the Deferred Tax
Asset in Q4 2019, due to a history of persistent losses in the
prior 3 years. The Tax Asset was subsequently re-recognized in Q4
2022, after a sustained improvement in financial performance and
the expectation that such continued performance will allow for the
Canadian non-capital loses and other deductible temporary
differences to be utilized before their expiry date.2 Total shares
repurchased over the 5-year period as a percentage of the opening
balance of shares outstanding after the business combination in
June 2018.3 Discount to book value estimated by comparing the VWAP
for shares repurchased against the average book value per share
reported for the most recent corresponding quarters.
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