James Carthew: Why All Active Asset Capital is generating a mighty social media buzz

This tiny British Virgin Islands investment company has soared in value with the share price at 51p valuing the company at £516m and apparently trading at a 3,500% premium. What's going on?

The investment companies sector includes many fringe players that I generally don’t pay much attention to. For example, when I compile lists of best-performing investment companies, I routinely ignore funds with market caps of less than £15m. 

One stock that has long been excluded is All Active Asset Capital (AAAC) – an investment company domiciled in the British Virgin Islands but listed in London. However, this has sprung into life recently, soaring in value with the share price at 51p valuing the company at £516m and apparently trading on over a 3,500% premium – what is going on? 

Well, it is complicated, but some investors think AAAC will soon own a sizeable chunk of the next big social media platform. 
Three years ago, the fund was named All Asia Asset Capital. It had a 7% stake in Myanmar Allure Group, a hotel and gaming company in Myanmar valued at less than £1m, about 200k in cash and net assets of £1.1m. 

In 2019 it acquired a new board, its new name and had started raising money to broaden its portfolio into Europe. In 2020, it bought a stake and some warrants over shares in Asimilar Group. 

The new chairman was James Normand. He has private equity experience and was finance director of Pathfinder Minerals for about seven years, up to 2016. Rodger Sargent (Sports Internet Group, Bigblu Broadband, Audioboom Group and S4 Capital) became an executive director and Peter Antonioni (a commodities-market broker in Singapore and backer of a number of start-up companies) was made a non-executive director and stumped up some cash. He now has a 11.9% stake in AAAC through a vehicle called One Nine Two Pte. 

At 11 December 2020, the date of the last interim accounts, AAAC had over £10m in cash, its stake in Myanmar Allure was valued at £150k, its Asimilar investment was valued at £319k and it held a €3m (now €3.65m) secured convertible loan to MESH Holdings. Asimilar has an 8.3% stake in MESH. 

MESH is planning to buy a significant minority stake in a Belgian software company called Sentiance.  
AAAC has been issuing lots of shares – there are now over 1bn in issue. One backer, who bought in last March, is Chris Akers, who has been involved with numerous start-ups including Sports Internet Group. He now has an 8.1% stake in AAAC. He is also an investor in MESH. 

AAAC has brought on another non-exec director, Colin McQuade – ex Barclays and Sky and currently the chief technology officer at BGL Group (owner of comparethemarket.com). He has been granted 12m options in AAAC at 15p. 

The big excitement is over AAAC’s stake in a company called Aquaa. So far it owns 6,000 shares in this company which it bought on 2 March, but it has options to subscribe for up to 125,000 shares at €1,000 per share – ie, €125m. The options form part of Aquaa’s proposed Series-C round of funding. If AAAC can exercise its shares and Aquaa raises all the money it hopes to, AAAC will have a 16.7% stake in Aquaa. 

The sharp-eyed amongst you will have realised that AAAC hasn’t got the money to fund this. However – and this is where the excitement builds – property developer Nick Candy of Candy & Candy fame and David Rosen, the 91-year-old co-founder of Sega, each have 100m options over AAAC shares at 50p each – ie, £100m worth altogether. 

Another name that crops up a lot is Robert Bonnier, former chief executive of Scoot.com, who is the largest shareholder in MESH and the founder and boss of Aquaa. 

Aquaa will launch in Asia later this year. It is a social media platform, backed by an as yet unnamed global technology company, built around groups with common interests – fans of a football club or devotees of a band, for example. Sentiance is writing the underlying software and Aquaa is bringing that in-house by buying the balance of Sentiance that MESH doesn’t own. Aquaa has been hiring from the likes of Google, Facebook, Twitter, TikTok, ESPN and Netflix. 

I told you it was complicated, and I haven’t even bothered to wade through the raft of other option agreements over AAAC shares. 

The ducks seem to be lining up and, assuming all goes to plan, the next big question is whether Aquaa’s launch gathers momentum. The rewards if Aquaa succeeds could be significant, but it has a big mountain to climb. 

James Carthew is a director at Marten & Co, operator of the QuotedData website. The views expressed in this article are his and do not constitute investment advice.

 

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