Term deposit and bond marketplace Cashwerkz may be struggling to keep its head above water but this has not stopped the company from pushing ahead with ambitious transformation plans.
Yesterday Cashwerkz launched a capital raising to fund the acquisition of a 25 per cent stake in investment manager Tactical Global Management, which will play a role in the development of new business ventures.
It also wants to raise funds for ongoing growth of its other businesses. The amount it is seeking was not mentioned in its investor presentation, although it did disclose that 25 per cent of Tactical Global Management would cost A$3 million cash plus performance rights.
And it announced that it will, with shareholder approval, change its name to Income Asset Management Group to better reflect its “refreshed vision” as “the most trustworthy and capable platform for research, execution and management of income investments.”
The reality is that the company is strapped. Its interim financial report, for the six months to December, revealed a business with cash outflows of $3.9 million during the half and cash and cash equivalents of just $2.1 million.
A blowout in expenses from $1.9 million to $7.5 million, courtesy of its expansion plans, contributed to a loss of $8.8 million.
Not for the first time, the auditor qualified the financial report, saying there is “material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern and therefore the group may be unable to realise its assets and discharge its liabilities in the normal course of business”.
Since then, cash outflow in the March quarter was another $1.5 million.
Cashwerkz started life as an intermediary offering investors access to term deposits from around 50 ADIs. Its pitch was that investors could move their money quickly from one provider to another without having to go through the hassle of AML and KYC checks when opening new accounts.
Last August, the company launched BondIncome, a service offering bonds and other fixed income products to wholesale investors and financial advisers. Revenue from that business has already overtaken the deposit business.
Also in August, it launched FundIncome, an incubator for asset managers seeking to establish their own funds management businesses.
In November, it made its first FundIncome Investment, taking a 25 per cent interest in Fortlake Asset Management, a fixed income fund manager.
The planned 25 per cent investment in Tactical Global Management will be FundIncome’s second investment. The idea is that Cashwerkz, Fortlake and Tactical Global Management will combine resources to come up with new products and services.