Everyone’s Gone To Pluto
Crypto mining group Argo Blockchain currently has a market cap approaching £900m, and has in just the space of a few months become a stock market darling after a multi-bagger move. In fact, shares of next generation tech investor Pires Investments (PIRI) have also rallied sharply since the turn of the year – tripling in value to give it a market cap of £25m. Both companies currently have an investment in Pluto Digital Assets in common.
What is interesting in the wake of the recent £26.8m fund raise from Argo is that £7m was to be used to top up its holding Pluto Digital Assets. Argo Blockchain CEO Peter Wall has said the move was to diversify Argo across the digital assets space, not just in Bitcoin. Pluto Digital Assets invests in, incubates and advises digital asset projects based on decentralised technologies (DeTech), decentralised finance (DeFi) and networks such as Ethereum and Polkadot. It also connects Web 3.0 to the global economy. Clearly, to attract the attention of listed companies Argo and Pires in pre-IPO funding rounds means we are looking at a strong investment proposition at Pluto, which is currently due to IPO in May.
Pires To Follow The Argo Re-Rate?
The big plus for existing shareholders in Pires is that it is invested in Pluto – it now has now moved its investments in the digital assets space into a focused investment in Pluto with an expert management team, as well as having an attractive portfolio of next generation investments. The attraction for those not yet invested in Pires is that for £25m you are potentially getting exposure to cutting edge tech opportunities at a fraction of the rating of Argo.
Into The SPAC Era
Investment companies and the stock market have always had a somewhat difficult relationship. Investors themselves seem to have a problem valuing them, and perhaps rather typically – before the SPAC era, have decided not to take any prisoners. On this basis an investment company will be rated according to its weakest link, rather than the jewel in the crown.
In addition, the market will be looking for continual turnaround in the investments of an investment company which Pires has already demonstrated. Certainly, no 3-5 year only view in which a holding is allowed to develop but more of one focused on near term realisations.
Happily, as we have seen in recent months, and perhaps for the first time in the same company, all the issues regarding a small cap investment company have been addressed. While the share price is not everything, the tripling of Pires since the end of last year certainly suggests that the company is on track. There are various positive fundamental factors at play currently.
The New Tech Boom
The first is that Pires is a “next generation” technology investor. Happily, in what could be described as the second great tech boom, after the dotcom bubble in 2000, next generation technology has gone parabolic. It has been aided by liquidity via QE and in the wake of the pandemic, a surge to online. The consequence of a boom in any space is that timelines speed up, as valuations soar. The trick is of course to be able to spot the next big thing ahead of the crowd. The flaw in many investment companies that the management are limited by their specialist knowledge – their trading edge. Pires “cured” this issue with its investment in Sure Valley Ventures, a venture capital company. This meant that it multiplied its specialist players and experts, ensuring that as much of its next generation investment remit is covered.
And of course, there is the investment timeframe problem – for those impatient private investors. For them 6-12 months is more than enough to wait for a liquidity event. The optimal timeframe for a 10 bagger is up to 10 times that period, IF the investment is correct. As well as being backed by the liquidity and innovation boom of the moment to speed things up, with Pires, the resurgent IPO space has also contrived to provide scope to find shorter-dated investments with known end dates.
The Pre-IPO Sweet Spot
The 3-6 months window of the final pre-IPO round can be regarded as the sweet spot of the present tech investment boom. Here valuations even in the hottest companies are by definition going to be tempered in order to ensure the success of the float. This means that whether it is DeFi (decentralised finance) or online betting, there is a turn to be had for a pre-IPO investor like Pires. This is over and above the ability to get more stock on board of the best plays due to it being an “institution” rather than an individual. The illustration of the above points comes from Pires entry into pooled sports betting play Low6, ahead of its forthcoming IPO, as well as decentralised technologies group Pluto Digital Assets.
The irony of a cynical stock market is that little of the sizzle of a good deal is ever factored in fully until the liquidity event is realised, plus of course the habit of judging an investment company by its weakest link. The implication is that even near the highs, the share price of Pires is discounting present and future value, and instead reflecting a lagged view of the company.
As well as the management of Pires sifting through all the best tech opportunities “so you don’t have to”, taking on its shoulders event risk and execution risk on next generation deals.
Follow The Money
Prospective shareholders in Pires also have the comfort of being on a shareholder register populated by some of the UK’s best stock market investors, and specialist, such as serial entrepreneur Chris Akers and John Mahtani. Purely on a “follow the money” basis Pires is currently in play, without great fanfare, but one can expect the market to catch up soon on its modest £25m market cap. The latest share price rise in the wake of the Argo Blockchain / Pluto announcement underlines this point.
The Latest Next Generation Investment
As if to underline that Pires is not a company that rests on its laurels, this week has witnessed its latest foray into a fast moving space. It has invested £250,000 in Polience Limited (PreCog), a security solution platform company that provides data intelligence to combat crime, terrorism and protect vulnerable people, as part of a £1 million fundraising round. Sure Valley Ventures, in which Pires has an effective overall interest of circa 20%, has invested the remaining £750,000 from the round.
Pires Invests In Cybersecurity 2.0
The significance of the investment is that it underlines the way that cybersecurity has gone 2.0. It is now more about tailoring needs and tackling larger needs than merely blocking a virus. Organisations need smart eyes and ears to act as sentries on the online watchtowers, to guard against bad actors and counterfeiters, to nip threats in the bud. Previously, these could only have been detected by the “human touch”, but with the kind of advancements developed by PreCog, a more holistic block on threats is now available. In taking a stake here Pires has underlined its credentials in next generation technology once again.
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