Augmentum Fintech (AUGM ) has grown its portfolio to 25 companies with a £2.7m investment in cyber insurance platform Baobab and added a further £4m to digital bank Zopa as part of a £75m funding round.

Berlin-based Baobab is the first insurance technology business in the £275m European private equity portfolio, which impressed investors with stable half-year results in November. It is Germany’s leading consumer tech subscription platform, catering to European cyber insurance for small and medium-sized enterprises (SMEs).

In a blog on the company’s website, Martyn Holman, a partner at Augmentum, said SMEs are clear targets and victims of cyber-attack and are largely unequipped to cope with the associated risk versus large corporates which have in-house chief information security officer (CISO) teams.

‘We are pleased to lead Baobab’s new investment round. We have strong conviction that new risks are driving opportunities in insurtech and cyber represents a fast growing and underpenetrated market,’ said Augmentum chief executive Tim Levene (pictured).

‘The team demonstrates strong execution capabilities in developing a solid product, building out a rapidly expanding network of broker partners across Germany and have secured backing from a leading tier 1 capacity provider in Zurich.’

The further investment in Zopa makes it the second-largest holding in the portfolio at 11.1% of total assets. The bank became profitable in April 2022, 21 months after securing its banking licence, and has now surpassed £3bn in deposits across its Smart Saver and Fixed Term Saving offerings.

The group grew revenue by more than 100% year-on-year as at the end of November and has attracted more than £2bn in balance sheet loans and issued more than 400,000 credit cards.

Numis analyst Gavin Trodd said he rated Augmentum’s management team ‘highly’ and believed the closed-end fund was an ‘attractive long-term investment’, but cautioned the early-stage nature of the companies meant it would not be a smooth ride for investors.

At 108.5p yesterday, the shares trailed at a 30% discount below the net asset value per share of 155p as at 30 September. This reflects their 27% fall over 12 months as speculative and growth stocks have been sold off, although as the half-year results showed, the underlying portfolio has been more resilient. 

Top holdings include UK SME banking provider Tide, which makes up 11.9% of the portfolio, digital asset exchange and financial services platform Gemini, a 5.3% position, and Stockholm-based consumer debt refinancing platform Anyfin, 3.4%.