S-Ventures holds a number of brands in its portfolio following a string of deals

Embattled fmcg investment firm S-Ventures has kicked off a fundraising effort to bring in at least £2.5m to bolster working capital and help cut costs and drive efficiencies.

The Aquis-listed group needs £1.25m for working capital requirements and another £1.25m for deferred payments related to the 2022 acquisition of gluten-free brand Juvela.

The firm, which counts Pulsin, Purely, Plant Punk, Livia’s and DTC agency Market Rocket in its portfolio, will explore a range of options to raise the capital, including debt and equity.

“S-Ventures’ existing market capitalisation presents several challenges, particularly in the current market environment,” a statement said. “These issues include limited liquidity in the trading of shares, which can lead to higher price volatility and difficulty attracting institutional investors.

“S-Ventures has also had difficulty accessing capital markets for financing, making it challenging to fund existing operations and growth.”

It follows a tough year for S-Ventures in which its shares were suspended from trading because of delays to filing financial results, as it struggled with the fallout of its lossmaking 2022 acquisition of German free-from food brand Lizza.

S-Ventures put Lizza into liquidation in April this year – just five months after buying the business – after suffering a net loss of €1m. As a result of the failure, S-Ventures also incurred a €1m write-off for loans owed by Lizza.

Delayed accounts for year ended 30 September 2022 showed widening pre-tax losses of £3.5m, up from £1m in the previous period as it battled rising costs.

Revenues grew significantly in the year from just £1.6m to £8.6m thanks to a string of deals.

Losses in the six months to 31 March 2023 stood at £1.3m on net sales of £7.6m, and the group said it had started to record a positive monthly EBITDA following significant restructuring work at Pulsin and other subsidiaries.

Since July, the group has focused on potential efficiency savings and appointed Stephen Argent as CFO to oversee the management of accounting and financial controls, including the consolidation of central overheads and the integration of specific functions within the group.

Ahead of its next set of annual results for 2023, scheduled for February, a trading update, announced today alongside the fundraising launch, showed total gross revenues for the 12 months to 30 September 2023 are expected to be at least £16.9m.

EBITDA – excluding losses from the liquidated Lizza – is forecast to be in excess of £500k.

“This represents a considerable turnaround from the losses of our first two years’ trading,” the group added.

“To further enhance profitability and cash generation, we are strategically focusing on streamlining our operations.

“This involves consolidating central overheads and integrating specific functions within both Pulsin and Juvela. By combining these key operational elements, we aim to realise significant cost savings, thereby strengthening our financial position.

“This approach underscores our commitment to delivering sustainable growth whilst maintaining the highest standards of product quality and customer service.”