Molten Ventures Plc (GROW) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Molten Ventures Plc FY '24 Interim Results Investor Presentation. [Operator Instructions]. Whilst both Martin and Ben will endeavor to answer questions at the end of this meeting, where possible, please note that their ability to do so may be restricted by the application of the takeover code in respect of the proposed or share acquisition of Forward Partners. Before we begin, we'd like to submit the following poll. And if you give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand over to CEO, Martin Davis. Good morning.

Good morning. Thank you very much, and welcome, everybody, and thank you for joining us. I think this is about our fourth or fifth in a series of these webcasts, and it's very much the intention that we communicate with our retail shareholders, a much broader group of shareholders in as clear a way as possible. And we hope that you value this platform and these sessions. And I think right now, it's a very interesting time for us to be able to share with you what's going on in the company, both the interim results, but also the announcements we made this week around the acquisition Forward Partners and also the capital raise. I think by way of introduction, I think most people on this call probably know us reasonably well. But I think it's important to know that we do have a very strong track record of delivering both returns and cash. And I think that's something that, if you look over the last 6 years since the business IPO, we've delivered 30% average return across the portfolio, and we've delivered over GBP 0.5 billion of cash realization since IPO, and that's an average of 16% per year. So from a growing NAV and delivering cash perspective, we have a very solid track record. The market environment has been very challenging and particularly over the last 18 months, and we've been adapting to that change in the environment. As many of you will know, we moved very quickly early last year to get into supporting our portfolio companies to help them to be able to manage their businesses through this new environment, which we have recognized. We've managed through downturns before. And so to help them to preserve capital, but also to ensure that operational efficiency is particularly important at this time. Prioritizing route to profitability and sustaining top line growth. These are the areas that we've been working with our portfolio companies really for the last 18 months to ensure that they are well prepared to the environment we're in and in a strong position as we start to come out of it. From Molten's position, we've been looking and preserving our balance sheet and really looking at capital preservation over the last few years, which has been obviously a very important part of us managing our way through these downturns. So we do continue to make a very modest investments. You'll see when we see the numbers. But there are additional increasingly interesting opportunities. Because this period of market dislocation means that there is a dislocation in the pricing market, particularly in the secondary market. And as the valuation environment starts to stabilize and we'll talk about that, we talked at our year-end that we were seeing that stabilization that's continued. We're then moving into this period where we're seeing many more buying opportunities. And the all-share acquisition of Forward Partners we see as very much one of these opportunities of enabling us to acquire a portfolio of early-stage companies in very attractive niches. But in addition to that, we think this is the right time for us to raise capital, and so therefore, we've taken the opportunity of having a strong cornerstone from Blackrock and the backing of the British Business Bank to enable us to ensure that we've got a really strong balance sheet that enable us to capitalize on these opportunities as we start to move through the cycle. Can you move to the next slide, please, Ben. What I think it might be useful doing is -- I think a number of you or most of you I hope will be familiar with our model. I won't spend much time on this. But one of the things I will point out is on the bottom right-hand chart, our ability to invest through the cycle and through the various stages is a very important part of our model. And we have access to very early stage businesses through seed, through the seed funds program of our fund of funds. And that's a very important area for us to be able to get early visibility around the exciting companies within the very early-stage seat ecosystem. Then as we move through Series A into traditionally where we would invest post A into B at that growth stage where these companies have very rapid growth. And that's really the area that we are most well known-towards where we make most of our returns, and that's where we focus most of our investment. Whilst I'm on this slide, though, that's slightly earlier stage, which is where Forward Partners sits is also an interesting area for us. It's not something we do, but having capability that allows us to spot the best companies slightly earlier and to get access to them slightly earlier is really important for us to deal flow as we move through the growth stage. Ben, if we could go on to the next slide. And I'll ask you, Ben, maybe to take us through the highlights and the guts of the interims that we've announced this week.

Yes. Thank you. So yes, moving on to our interim results. These are preannounced in the trading update, and then we put out the actual interim documents just over a week ago. What we've had in this period was very similar to the previous 6 months period that completed the end of the last financial year, where we've seen a bit more stability in terms of the valuations, but ultimately, we've had a negative movement on those valuations. The gross portfolio value, therefore, ends up at GBP 1.3 billion, and the movements that are being reflected there are a net movement, which is net of the GBP 20 million increases in portfolio value and GBP 70 million of decreases, which gets us to a net GBP 50 million reduction. And that leads with currency to minus 4% movement down on the gross portfolio value. One of the features of this period and certainly the overarching aspect of this current environment has been about capital preservation. And you'll see that we've invested very little in the last 6 months, just GBP 17 million. And we've had the second 6-month period where we've realized more than we've invested. And therefore, those -- the net between the GBP 17 million and the GBP 33 million obviously comes off the gross portfolio value as well. Overall, leaving this half year period with GBP 1.6 billion of AUM in the group, and the NAV of GBP 1.1 billion translates to an underlying GBP 7.35 per share as at the 30th of September. So if I just move through the next slide, we'll get a bit more detail on some of those numbers. This deployment for the period, as I said, was very low, only GBP 2 million deployed into new investments as we are managing our capital resources and GBP 2 million deployed into follow-ons in our existing assets, and the remainder of the GBP 17 million that's been invested that's gone into the seed fund of funds program, where we've made commitments into underlying seed funds. And also GBP 5 million into Earlybird where we're an LP into some of those funds. The overriding commitment position and the deployment into those commitments on the seed fund of funds side has been lower than we anticipated as we're seeing across the market that each of the funds as well as ourselves are preserving that capital as the market environment has been more challenged. And if you see on the right-hand side of this chart, the order of deployment over the years that we've been public, that this period was indeed very modest compared to previous periods. And that's one of the features that we will talk about as we talk about the acquisition and the fund raise that led to some of those decisions. Next slide is reflecting our net profits from the income statement. On the left-hand side, we have target returns of 20% through the cycle. We always talk about this through the cycle approach because clearly, returns are lumpy. And in the previous periods, we've had well above 20%. And in the last couple of reporting periods, that's been moving down as asset valuations have moved down, but the average return is still well above that target return of 20%. And then on the right-hand side, a similar story, but looking at realizations, these are important feature of our model, recycling capital back to the balance sheet, but also underpinning the valuation that we hold the companies at when we sell these companies at our NAV or at an uplift to our NAV. And we have a good track record of delivering capital back to the group with over GBP 500 million of realizations. In this period, you can see against our target return of 10% of the opening gross portfolio value, we've been slightly below that in the last financial year and also in this 6 months, and that's really reflecting the realization environment, which, as we would expect to be has become more stretched in this current period. But I think what's important to note is that even though that is becoming more difficult and, therefore, transactions are more elongated in the time period, we are still able to return capital coming through the portfolio. And it's also worth noting here that in those peak market periods that we recycled quite a substantial amount of capital, over GBP 200 million in the FY '21 and over GBP 120 million in the FY '22 periods. But again, just like with the returns, it's a through-the-cycle target number because of the lumpiness of the windows when you can transact. And what we're happy to show is that our average return is still above the target 10%. Looking at the distribution of those returns, this slide is showing the realization multiple for each of those exits. And the important measure to look at here is the percentage of invested capital. And so what you can see clearly is venture is very much a portfolio approach. You need to have a basket of companies across different stages and maturity, but also different technology subsectors and you're effectively risk managing by having that portfolio. And so yes, we focus on the top 17 companies in our portfolio, and we see those as the key value drivers at the present time and the 60% of our valuation. But when you look at the exit, it really comes from a range of different companies at different stages. And it's very much skewed to the winners. So the bracket on the right-hand side, where we have 40% of our invested capital, which delivers those outsized returns. That's really what drives the returns that we can demonstrate as a group and our track record. But it's really in those middle cohorts that you see where a lot of the management time is spent, and we work very hard to keep moving our invested capital along to recycle that money, and also to ensure that our investors who are on the Board of those companies can spend most of their time on the right-hand side of this chart. And so it's very important for us as a group, and we have that discipline of continuing to move companies along and keep our heartbeat of trade sales coming through. And then looking at the portfolio resilience, it's been a much more important feature clearly in the last 12 to 18 months and a lot more focus has been on the liquidity preferences that we have in those companies. And really what that is, is a share structure that we always invest through where our shares have a downside protection components. Clearly, in down markets like we've seen over the last 12 to 18 months, that becomes more relevant. And we have put in some metrics around how much capital we've invested in the portfolio, and it becomes more important when you look at it in the context of this downside protection. And so overall, we've invested over GBP 800 million into the portfolio, and that's supporting the current gross portfolio value of GBP 1.3 billion. And the majority of those gains are reflected in those top companies in the call. And you can see that in the emerging portfolio, we have almost GBP 500 million of value against GBP 500 million of invested cost. So as an aggregate, we're holding our emerging portfolio effectively at cost with downside protection, and that's an important part of the risk management model of venture capital investing. And it's an important feature as market is turning away that we have over the last 12 to 18 months. What's also important is that our companies can reflect within their own balance sheets and their own growth strategies, the ability to maneuver to different market environments. And you can see that growth continues to be strong at a 50% projected and 57% revenue growth in this current year, but it's lower than we had previously indicated. And what you're seeing there is the companies that are reflecting the fact that the cost of capital is no longer cheap and the availability of capital is no longer abundant and, therefore, they're adapting their models to [ suit it. ] That's really driving a lot more of this capital-efficient growth. But what hasn't been diminished substantially is their growth gross profit margins. You can see in the chart on the bottom right-hand side that they're very much an indicator of technology businesses. High gross margins indicate that in the future, you can turn EBITDA profitable when the time is right. But it also means that the revenue they are generating can offset some of their costs. And so they're not purely equity funded they are driving some of their own growth through their commercial traction. And I think with that, Martin, I'll hand it back over to you so you can put some of that in the context of the acquisition and the equity raise.

Thanks very much, Ben. And if you could go on to the next slide, please. And so obviously, this is a very exciting time for our business, very interesting time for the sector. And despite where we've come through the cycle, we do feel that this is the right time for us to be able to take -- to move on good opportunities. And so we've -- moving forward with the equity raise this week at a target price, raising GBP 55 million of the institutional placing at a target price of GBP 2.70. We have up to a really good strong cornerstone from Blackrock, which was a 70% shareholder of Forward Partners, but also really good support from another principal shareholder of us, the British Business Bank. And I think from our perspective, we've been talking with shareholders and the market for some time about how we could deal with the liquidity in the business, in the event that we had some good opportunities. And it was quite clear that there were a number of possibilities for us. And we did look at debt. We've always -- we've carried some debt. We think that we carry the right level of debt. And so I think, again, shareholders have different views about how much debt you should carry and indeed, people have views about whether you should carry any debt in venture. We think 10% of our NAV is about right. And the debt market was very difficult. And of course, then we have realizations. And we can, of course, generate realizations. But the reality is that people will always be looking for the top assets at big discounts in an environment where there's tough liquidity and Ben mentioned the realizations environment. And so rather than selling our best assets at a discount or indeed waiting for realizations to come through, we felt that it was the right time to go and speak to shareholders about raising equity. We realize this is the most dilutive method of raising capital. We do understand that; however, we also -- all that does really from our perspective or what that certainly tests from our perspective is, meaning that we've got to be very clear of the returns we make on anything that we invest. So having the support of 2 good strategic shareholders like Blackrock for the initial cornerstone and then the British Business Bank, I think, gave us a degree of comfort that the market would be open to us raising some capital at this time, where we see exceptional opportunities. We will also be raising as very much our -- one of our portfolio companies. We're a big supporter of both retail space and also primary bid. And so therefore, we do have some capacity that we have been able to offer prime bid, which we're very pleased with, and we're very pleased with that, that has received a fairly good take up as well. So that's the fund raise. And why now? Well, we see a number of interesting opportunities. And one of them is our Forward Partners Group. We've offered GBP 41 million in share -- all-share acquisition or share deal. And we fixed that at a 1:9 exchange ratio. And we felt that, that was the important thing to do is it sort of anchors the price and allows us to be clear about what Forward Partners are getting with 2 listed companies, this can be quite complicated. And Forward Partners, we'll talk a little bit more the detail of Forward partners, but they've got reported a net asset value of GBP 90 million, of which about GBP 12.5 million was cash at the 30th of September. And as you can see from the post raise and acquisition group, Forward Partners dilution will be 7.8, and the fund raise will account for 11.2. And we think that this is the right thing to do at this time. We think Forward Partners is a really interesting opportunity. Maybe, Ben, if you could move on to the next slide, then I will talk a little bit about the rationale. I probably start with the placing -- rationale to the placing and the use of proceeds, which is obviously something that's very -- of great interest to shareholders. Now we think that we have demonstrated and Ben has shown in the first half of this year and indeed, the second half of last year, the capital allocation discipline that we have exercised over the last 12 to 18 months. So we do show and we have shown that we can continue to stay in the market by making very limited new, but also follow-on investments. We've been very careful and very diligent in looking at what's required in the portfolio and to manage our capital accordingly. Board that doesn't leave us for is really -- as the valuation environment stabilizes, it doesn't really leave us the opportunity to make very selective investments where at a time that we believe is a very exciting time to invest. So the capital raise will help us to move from our very strict cash preservation focus. I would add very importantly that we will retain our discipline in investing, which doesn't mean that our discipline changes as far as we make investments. But what it does mean is that we can make very targeted acquisitions and target, particularly secondary assets where we are seeing very attractive valuations. And as we don't see the realizations environment improving very quickly, we do think there will be realizations. But the overall environment, we think will still stay tough as we go into the next calendar year. We think we will see more and more really interesting, attractive assets at very good prices. And so us being able to make very targeted acquisitions, both of portfolios, but also to be able to follow on in the enlarged portfolio. And so that's both the new portfolio for Forward Partners but our own. And although we're very clear about what we need to invest in the portfolio, and we've been very clear about what we need to invest in the portfolio from a defensive perspective. From an offensive perspective, we are obviously severely limited with the current capital that we have in the business. We will make selective new investment in early-stage companies. But again, I think that those will be very selective, and we will retain our discipline. But also, the raise does enable us to bring in a new strategic shareholder in Blackrock. So Blackrock is already a holder, but these are a different set of funds. They operate entirely differently. So it's a new source of capital, a new long-term strategic shareholder for us, which we do believe will be important for the business over time. And I guess the final point I'd make, I've explained that we won't change our capital allocation discipline. We will retain our discipline despite this additional capital. But what this does allow us to do is to take advantage at the right time in the cycle, and it also enables us to provide a pipeline for future opportunities. Most of the growth we get in that comes a number of years after we make our investment. And if we have a long period of making no investments, that pushes out those returns. And so therefore, by carrying out both the acquisition and the rains and by looking at particular portfolios of companies, it does help us to build that pipeline of future growth opportunities. Then maybe, Ben, if you could move on to the next slide. I think it's also worth -- I mentioned secondaries a number of times. And I think it's important to remember and our flexibility as Plc gives us a great deal of more opportunity than the typical GP/LP type structure. And what that means is that we can be much more flexible in the investments we make and we can take advantage of the secondary market. And the secondary market is a very pretty one that we've delivered very good returns. And whether it's in Seedcamp, the portfolio we bought in 2017 or the more recent acquisitions through Earlybird and Digital East. Our ability to generate total returns and our track record is very strong, but I think the other element of buying secondaries is that your ability to turn that to cash generally is much quicker. And so again, our ability to turn that return into cash quickly, our track record is very strong. And we believe that in this particular stage of the cycle that we should be able to have the opportunity to go back into the secondary market and pick up some really interesting portfolios of assets. We go to the next one then, please, Ben. I'll talk specifically about forward partners. I think there is -- we see this as a -- in some respect, it's a relatively small acquisition for us, but in fact, in others, it's quite strategic. There's a portfolio of 43 assets. It's a very balanced portfolio, the founders. Nic actually came from Draper Esprit, that's his company 10 years ago, set up his own firm, his own fund and then listed it in 2021. And so the philosophy of building out a really balanced portfolio is very similar to ours. The philosophy of ensuring that it's very well capitalized, albeit at an earlier stage is very similar to ours. So again, over 70% of the top 15 companies have 18 months or more cash or are on the way to breakeven without a need of further fundraising. And again, that's very much the philosophy that we have within our portfolio. We also invest in rapid growth companies. So again, the very high growth, 133% in the first half of 2023 in the top assets. And so I think, again, it's albeit earlier stage, it's very similar to the type of portfolio that we built in Molten. And of course, what it provides is the ability for a much broader device pipeline and also some new capabilities. And so investing in earlier-stage businesses does require a slightly different lens. We're not going into seed. They are post seed early A. We're post A into B. And so we will be bringing in some good capabilities that will be additive to ours from an investment perspective that enable us to invest at a slightly broader range across the stages. And I think that's something that's also very valuable for us and will be important in the future. But also, of course, ultimately, it's about the portfolio and a significant discount to NAV with our ability to acquire attractive assets and to deliver strong returns, we think there's very strong -- good, strong strategic rationale for this acquisition. And then maybe, Ben, if you could move to the next slide, a little bit about Forward Partners. I mentioned earlier on GBP 90.5 million net asset value, portfolio is a shade under GBP 77 million. And when you look at the historical NAV and the discount to NAV, it's not -- it's been fairly similar to ours. And I think what gives us a degree of group of comfort and we've done, obviously, we've done a fair degree of due diligence on the portfolio. When you look at the degree that they've come off from the 2021 highs, it's not dissimilar to ours and they've taken them broadly at the same approach to prudence as the markets moved over the last couple of years. And so from that perspective, we're very comfortable with the valuations. There will be a Rule 29 valuation of both their company, their whole portfolio and us, independently taken from both of our auditors. And that will -- that should hopefully confirm the valuations. I think the other thing to bear in mind is that, as I've said before, it's a very diverse portfolio. They came, but they were actually in our seed fund of funds. So we know the portfolio well, and our fund of funds team has been tracking their assets. And so we do know the portfolio very well, and that gives us more confidence whenever you're acquiring the portfolio. The more you know about those companies clearly, the better it is. And then, Ben, if you move on to the next slide, please. So I'll move briefly on to the outlook because we have had some questions and, obviously, we'll be very happy to turn to those in a few minutes. So we do understand that this is a very challenging and have been very challenging market environment over the past 18 months. And we do think that things should get better through next year, things we don't believe will get better very, very quickly. And we have a very stable investment team. We've got a lot of experience of managing through these cycles. And we've got a very strong and stable portfolio that, as Ben mentioned earlier on, we've seen that stabilization around valuations. So we do feel that we are in a strong position coming through at this stage of the cycle. And we think that we are uniquely positioned because of the nature of the fact that we're a Plc and our combination of expertise and the access that we have to the market to be able to access those best deals across Europe in what we see now as an increasingly buyers' market. So moving forward, we will continue to deploy capital into very targeted secondary opportunities and we will continue to support our follow-on into our company and our own companies. And those that followed us for a while will know that we are a firm believer in generating value is to continue to back the winners that you know very well. And some additional capital gives us the ability to also maybe be a bit more proactive within our own portfolio. We will continue to focus on looking for realizations. We have a very dedicated and tight process to make sure that we realize at or above NAV and at the right price. And we believe that our portfolio is sufficiently attractive that will enable us to do that. But whilst all this is going on, we need to continually actively manage the portfolio, and we need to help our founders to extend their cash runways and -- but not at the expense of growing. It's really important for us to help them to manage their expenses, but not to affect their growth or at least to try to continue to grow as aggressively as they possibly can. We do believe the 20% fair value growth through the cycle is still achievable. That remains our target. We will obviously, struggle in the liquid market to deliver that year-on-year. But over time, as Ben showed in the numbers that we showed earlier on, that through the cycle on an annual basis, we do believe that we can deliver 20% fair value growth per year. We've continued to build third-party AUM and our EIS, VCT books are strong. We've launched our Irish-focused fund, and we will continue to look at other strategies that enable us to build AUM that brings in additional capital to sit alongside ours that enable us to continue to deploy and play in an increasingly exciting market. But also, I think it's important that our fund of funds program is doing -- is continuing to grow and is continuing to lead deal flow and to give us insights into assets and deep portfolios with Forward Partners that enable us to be able to make good attractive investment decisions as we go through at this stage of the cycle. So we do think that the capital raise plus the acquisition Forward Partners represents a really good opportunity for us to build out the portfolio at a good valuation and enable us to stay in the market whilst it remains a buyer's market. And so we very much look forward to updating everybody as we go through the coming year. We have another one of these sessions based on the health sector, Healthtech next week, which we hope as many of you can join as possible. But as far as this presentation goes, that's what we were planning to cover. But I'm very happy to answer questions, but I'll hand back to Paul.

That's great. Thank you, Martin, for updating investors this afternoon. [Operator Instructions] Ben and Martin, take a couple of moments to review your questions submitted already. I'd just like to remind you that a recording of this presentation along with a copy of the slides and the Q&A will be available via your Investor Meet company dashboard. Ben, Martin, as you can see, you've had a number of questions from investors throughout your presentation. So firstly, thank you to everybody for your engagement. If you could just make sure you got the Q&A tab and the right tab open underneath. And if I could just hand back to you to read out the questions and give response where it's appropriate to do so, and I'll pick up from you at the end.

Yes. Maybe I'll just -- I see the first question is the Forward Partners options. Can you review what options those are? Those are up to their RemCo, and so that's not something that we can opine on and that's for their RemCo to decide and so that's not something that we can opine on at this stage. What I would say is all options have vesting periods and performance targets associated with them. And one would assume that their RemCo will take those into consideration. The next question, maybe, Ben, do you want to take the question about the shares outstanding?

Yes. So the question is providing the shares outstanding following the Forward acquisition, but also the placing before this process, we had 153 million shares with the GBP 57 million equity raise that will issue about 21 million shares on top of that. And then once the acquisition completes, which will be in February-March period next year, there'll be just under 15 million additional shares on top. So some of all of those on us with 189 million shares outstanding as of March next year.

Thanks. And the next question is about the discount and should we be buying our own shares. I think I've explained the various options that we had available to us, and buying back our own shares with our own capital constraints wasn't something that we felt that we were able to do at the time. So I understand the question, but it was really a matter of our capacity to actually be able to do anything there. The next question is what percentage of duplication exist between Molten and Forward portfolios, if any? Pretty much, none. They are an earlier stage investment philosophy and so therefore, they would be the companies we'd be investing in. Some of their later-stage companies, once they've invested and they grow, they start to do Series A. We've seen a couple appear in our deal flow over this calendar year. And they've been picked up by the likes of our competitors that you would expect to be doing Tier 1 VCs doing Series A deals rather than us really due to our capital constraints. So I think that once -- I think what this demonstrates is that although within the 43 assets, there's very little over that. In time, we would be expecting to deploy into those best companies as they come through. The next question, maybe, Ben, if you could take the protection...

Yes. So the question is reflecting on Slide 10, where we show the downside protection where we have liquidation preference rights in 97% of the companies we invest in and then, of those, we have 46% where that liquidation preference is being triggered. One of the factors I mentioned was that we're effectively holding the emerging portfolio at cost and a feature of these liquidation preferences is that the value of the company can fall quite substantially. So if a company has been raising capital, let's say, a GBP 200 million valuation with GBP 50 million being raised. If we're investing as Molten in that GBP 50 million raise, the downside protection that, that gives us -- takes us from GBP 250 million post-money valuation all the way down to GBP 50 million of value being the capital that's been raised in our brand. That sits ahead of other capital, and that's a very normal structure in the venture capital markets. And what that, therefore, means in terms of this question is where we're showing 46% have the protection triggered is that we have been moving down the values of the underlying companies as the market as moved, we'll be reflecting those public companies through to our portfolio. And so yes, the value of that business has come down, but it hasn't moved our fair value in the company because it's protected by the liquidation preference that we're effectively holding a lot of those businesses at cost invested in any event. So the reflection of that slide is that 46% have triggered that retention.

Thanks, Ben. The next question from Michail is, when you refer to secondary opportunities, do you mean portfolios like Forward Partners or single asset investments that come to the market? What our experience in secondary acquisitions have been in portfolios. And so either private or public, but private are obviously much easier in many respects. And so I think we're really talking about secondary portfolios and I think that would be our main focus. The next question is, do we see exits being mainly individual holding based or like to be bundled exits by way of secondary sales? I think we've looked at whether or not we could put -- when we were looking to raise capital, we looked at whether -- what the market was like really for all exits for individual assets, for a bundle of assets or indeed a strip of the whole portfolio. And the whole portfolio is much more difficult to do. Bundles are, of course, easy to do, but they're all bundled with your very best assets. And individual assets are always your very best assets. And so I think there was another question earlier on about the hurdle rate. Our hurdle rate remains the same for everything, whether -- and so the hurdle rates we're talking about, we look to see a 3x plus return. If we can't see that then we won't do it. So it is -- the hurdle rates remain as they are; however, what -- and so that doesn't really change. But I think for us, it's much more important to be investing in these assets rather than selling -- at good discounts rather than selling our assets at the very height of -- sorry, the bottom of the market. So we -- that's where we are on that. Again, another question about overlap. I hope we've dealt with that. Question about the future of the VCT, EIS business and what plans you have for that? And what, in fact, the acquisition will have on it. So I think the acquisition won't have any impact on that at all. It is still a very -- it's a very exciting business, our EIS, VCT business. We want to continue to grow it. We want to continue to deploy capital using our single engine from the reserves that we have in the EIS, VCT. So I don't think it has any particular impact. It might help us a bit with deal flow because some of the investments that we'd be making in earlier stage will be more likely to be EIS, VCT businesses. But in general terms, I don't see it really has much of an impact. Next question is about valuation process of Seed A and the same as B+. Ben, maybe you want to talk a little bit about that?

Yes. So it's still following the same valuation guidelines, but there are differences in terms of the stage of the business and the methods you might adopt for earlier stage businesses, where they won't necessarily have the same commercial traction of those later-stage companies. The option pricing method tends to be the preferred route for valuation, so you just lean on the other techniques that are available where you're looking at the future probabilities of outcomes for those companies. At the Series B+, you're really more reflecting current value and the balance sheet day of those companies based on their fundamentals at that time. So there are some subtle distinctions, but it is following the same guidelines and will obviously be aligning to a single approach with the Molten valuation methodology ensuring that we're following those guidelines in the right way depending on the stage of the company.

Do you want to say anything on the FCA's concentration on valuation of private assets, Ben?

Yes. I think it's -- obviously, it's an ongoing process and looking at creating some degree of uniformity, if you like, across valuation, methodology, and approaches, and ensuring that people are following the international private equity venture capital guidelines where they lean on those. But I think what you've seen over the last few years, in particular, is the guidelines have been updated and be a bit more prescriptive about the approaches people need to take to ensure that there is that degree of, one, transparency; two, uniformity and approach, so that you can compare one set of companies with another set of companies. And if they're following IPEV guidelines to the degree of commonality, I think if anything in valuation, it's very difficult to totally exclude any of the judgmental aspects. But of course, it gives investors more confidence when you're seeing people following those same approaches.

And maybe, again, on the compression in valuation multiples?

Yes, this question is, do we think there'll be more compression in the multiples? And over the last 12 to 18 months, we've clearly seen that in the public markets where valuations were showing extended multiples as capital was freely available and cheap. We're now in a high interest rate environment, and that's been reflected in the cost of capital and, therefore, in the multiples for these underlying companies. And so I think why we've seen in terms of a cycle, if you look against historical multiples, we've been at lower points, clearly, maybe not the lowest, but it's come back from that over the last 12 months. We've seen an increase in those underlying multiples. I think the question slightly touches on the difference between the Molten portfolio and the Forward Partners portfolio. Those multiples are a reflection of companies, their gross margins, looking at their peer groups but also the growth in those businesses. One of the trade-offs at the earlier stages, you've got companies that are growing at higher rates, but clearly from a lower base. And so to some extent, the multiples are different to reflect that. But overall, I think you need to have a sanity check on multiples when you look at where can companies raise capital, where can they transact from an M&A perspective. And that's the fundamental approach that we take because when you invest in a company, the multiple is important and the day that you exit the multiple is important, and everything in between is reflecting the journey and the commercial traction of that business, so you can't lose sight of ultimately what is the target worth and how do you turn it into cash.

That's great. Ben, Martin, thank you very much indeed for your time and for taking all those questions. If any further questions do make themselves available, of course, we can present those to the company post today's meeting. Ben, Martin, I know investor feedback is going to be particularly important to you, and I will shortly redirect those on the call to give you their thoughts and expectations, but I wonder before doing so, if I may, Martin, just to return to you just for a couple of closing comments and then ask on investors to give you their feedback.

Thank you very much. And look, we think this is a really important time in our sector and for our business. And it has been a very difficult 18 months, and we do think that there is still some difficulty coming looking forward. We're in a very volatile environment; however, we do believe that our discipline through the last 12 to 18 months has got us into a really good position. And we think that this acquisition with the deal flow that it gives us the acquiring assets at a really attractive valuation, but also the equity raise that gives us the liquidity to be able to take advantage of the opportunities as we see them over the next 6 to 12 months, puts us in a very strong position as we look forward to the next stage of the cycle and into next year. We very much look forward to updating you when we get to the year-end at the end of March. And thank you very much for your support, for your questions, and for your time. And that concludes our session today. Thank you very much, and have a good rest of your day. Thank you.

That's great. Martin, Ben, thank you once again for updating investors this morning. Can I please ask investors not to close the session as we're now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team at Molten Ventures Plc, we'd like to thank you for attending today's presentation, and good morning to all.