Portfolio Updates

KRM22 and TT confirm transformational subscription and distribution agreements


KRM22 (KRM), the risk management platform developer focused on capital markets, has confirmed two transformational transactions with Trading Technologies (TT), a leading provider of SaaS-based services to capital markets companies worldwide.

TT is subscribing for a 25% stake in KRM for 53p per share, totalling £4.7m in cash. At the same time, both companies have entered into a distribution agreement for TT to market and distribute KRM’s risk management products to TT’s customers.

As part of the transaction, Keith Todd will relinquish his role as KRM CEO to become CEO of TT. He will however remain as Executive Chairman of KRM, while Stephen Casner, previously president of KRM, steps up to be KRM’s CEO.

Kestrel Insight

The subscription was priced at a 58% premium to the prevailing market price of 33.5p. This level of premium is a clear statement of TT’s belief in the true value of KRM. The £4.7m cash proceeds significantly strengthen KRM’s balance sheet and give it capacity to drive further investment in sales and engineering.

The distribution agreement has the potential to transform KRM’s revenues and provide it with a channel to TT’s extensive 1,000-strong customer list, which includes most of the world’s major Tier 1 banks.

While the success of many distribution and other channel relationships is often mixed, Keith Todd’s dual role as both CEO of TT and Exec Chair of KRM give this agreement C-Suite sponsorship at the highest level, making it a priority for both companies.

If successfully implemented, the agreement will significantly accelerate KRM’s growth prospects and give it a global market reach that would be unachievable on its own.

We believe these developments represent a pivotal moment for KRM. Kestrel fully supported the transaction voting our 22% holding in favour of the new share issue.

 

Kestrel’s Portfolio Updates should neither be construed as investment research, nor the provision of investment advice, nor a recommendation. This article should be viewed as short term commentary only based on the latest economic statistics, company results or information on upcoming releases or events. It is only a brief unsubstantiated summary of Kestrel’s opinion on such information as at the date of publication and no reliance may be placed upon any contents of this article by the recipient.


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