Juvela is the biggest brand in the S-Ventures portfolio and holds a lucrative contract with the NHS

Struggling fmcg investor S-Ventures is in talks with an AIM-listed firm over a potential takeover to support future growth.

Buckinghamshire-based Riverfort Global Opportunities (RGO) has proposed to acquire 100% of the business, which counts Pulsin, Purely, Plant Punk and Livia’s in its portfolio, in exchange for new shares in the firm.

If finalised, the deal would be classed as a reverse takeover as RGO would change from an investment firm to an operating company and then be readmitted to London’s junior market, where it currently has a listing.

A deal would value S-Ventures at £3.5m, compared with its current market cap of £2.7m.

RGO said S-Ventures was undervalued based on its level of revenue and growth potential.

It added a deal would bring additional funding to S-Ventures’ operations and provide the business with an AIM listing and better access to capital.

There were also “a number of interesting acquisition opportunities available” for S-Ventures in the fmcg space.

While discussions are ongoing, S-Ventures also agreed a loan of £1m from RGO and £1m from existing shareholder Sherwood International to strengthen working capital.

Each loan is for 12 months with interest at 15%, together with a 5% arrangement fee.

The company also extended a bridging loan, agreed in November, with a Middle Eastern family office, amounting to £1m. It has an interest rate of 2% a month and repayment has been extended from May to November 2024.

S-Ventures CEO Scott Livingston said: “We are delighted to announce this funding facility and proposed transaction. Against the background of a very challenging environment over the past 12 months within capital markets, we are pleased to further secure this significant new funding.

“The combination with RGO would provide us with a quotation on AIM and better access to new capital to support the growth and development of the S-Ventures businesses. The commitment of our shareholders and directors to this process is testament our belief in the businesses.”

S-Ventures has endured a tough year in which its shares were suspended from the Acquis market because of delays to filing financial results.

The business struggled in the aftermath of its lossmaking 2022 acquisition of German free-from food brand Lizza, which was subsequently put into liquidation just five months later.

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. But losses in the six months to 31 March 2023 stood at £1.3m on net sales of £7.6m.

RGO said in its statement on the potental deal that S-Ventures expected gross revenues of £18.9m in 2023 and EBITDA of £1.8m.

S-Ventures listed on Acquis in September 2020 with its shares reaching highs of 51.5p by January 2022 before crashing to current levels of 2.1p.

Since listing, it has raised £9m from the issue of new equity and its current debt stands at £9m, including £5.5m of acquisition debt and a £1m deferred payment owed from the acquisition of gluten-free bakery brand Juvela.