Two Shields Investments invests further into BrandShield

Technology-focussed investment company Two Shields Investments has completed its proposed investment of $0.5m (£0.38m) in BrandShield, it announced on Tuesday.

The AIM-traded firm said it also had the right to invest a further $1m on the same terms under the BrandShield option.

It said the investment was made by way of subscription to a convertible loan note, in which it had already invested $0.3m, as it announced on 4 March.

The note had been extended to allow the further investment of $0.5m, and to provide an option for Two Shields to invest up to a further $1m within nine months of 4 November, the board said.

Two Shields said it currently had an 11.34% shareholding in BrandShield in addition to the CLN subscriptions.

Should the company's $0.8m of notes convert in to equity, its holding in BrandShield would increase to around 16%, rising to approximately 21.5% in the event of the company exercising its further $1m option at the same price.

As it had previously outlined, the notes bear a coupon of 2.5% and would convert on the maturity date, being the second anniversary of the closing date unless an accelerated conversion event occurred on an earlier date.

An accelerated conversion event would include, among other things, an initial public offering or sale of BrandShield, or BrandShield undertaking a qualified fundraising round.

The price at which the note converted into BrandShield shares would be the lower of either $59.54 per BrandShield share, or a 20% discount to the valuation per share at the conversion point.

Two Shields previously announced that BrandShield's preferred strategic trajectory would involve a public listing on a recognised stock exchange - preferably an AIM listing - in the early part of 2020.

The company said it was “actively assisting” BrandShield in such an undertaking, and would seek to maximise the value gained to Two Shields shareholders should that liquidity event materialise.

BrandShield's latest accounts showed assets of ILS 11,551,991 as at 31 December, and a loss of ILS 4,928,907 for the period from January to December 2018.

“Our continuing focus on online threat hunting has generated excellent interest from a number of high-profile clients and potential customers throughout 2019,” said BrandShield founder and chief executive officer Yoav Keren.

“We have continued to acquire significant mandates from companies, many operating globally, including one of the world's largest online travel agencies.

“The pharmaceutical sector has also been a strong course of clients and one in which huge opportunities exist to penetrate further given the branded segmentation within and across the major players.”

Keren said such clients added to the existing blue-chip customer base of customers such as Microsoft, New-Balance, Levi's and Abbott.

“The additional funding provided by Two Shields Investments will allow BrandShield to conduct more aggressive marketing as we seek to achieve ever more market share in the lead up to our intended public listing in 2020.”

Andrew Lawley, chairman of Two Shields, added that the company was “delighted” to have been able to reinforce the investment in BrandShield following its recent fundraise.

“We see BrandShield as a pivotal value driver in the TSI portfolio and we very much look forward to assisting it reach its full potential.

“We endorse the management's strategy of seeking a public listing in the coming months and we will seek to continue to build our exposure to BrandShield in the anticipated build up to that event.

“We are hugely encouraged by the continued growth in all aspects of BrandShield, reflected through strong increases in annual recurring revenue, sales pipeline size and average client deal size.”

As at 1128 GMT, shares in Two Shields Investments were down 3.57% at 0.14p.