Induct Software announced a new financing agreement in January 2018, comprised of a convertible note facility secured from the European High Growth Opportunities Securitization Fund. The agreement, which was secured through advisers to the EHGO Fund Alpha Blue Ocean, gives Induct the right to draw down up to 50 MNOK in 20 tranches of convertible bonds of 2.5 million NOK each over a three-year period. CEO and founder of Alpha Blue Ocean Pierre Vannineuse stated that the investment in Induct perfectly fits with the investment pipeline of the company, which focuses on pan-European cyber security and healthcare technology.
Convertible Note Facility
Under the terms of the agreement, Induct is required to draw down a minimum of four tranches within the first 12 months after the agreement is signed. The remaining 16 tranches are not required to be drawn down should circumstances mean this is not necessary, for example should Induct later access better terms through another means of financing.
A maximum of 20 tranches total can be drawn down by Induct over the three years of the agreement, with a 30-day cooling-off period between each draw down. Each tranche issued entitles the EHGO Fund to warrants which will equal half of the convertible bonds’ total nominal value within that tranche.
At the signing of the complete agreement, a payment of NOK 1 million in convertible bonds was triggered from Induct to EHGO as a commitment fee. An overview of convertible bonds can be found in the short video attachment to this post.
Key Agreement Terms
The warrants attached to each tranche give the EHGO Fund the right to subscribe to a predetermined number of shares in Induct, for a global amount of proceeds that will be equal to half the nominal value of the bonds within the tranche that the warrants are attached to.
The bonds themselves will have a conversion price calculated at 90% of the lowest daily Volume Weighted Average Price (VWAP) as recorded over the 20 trading days immediately prior to the conversion notice being issued by the EHGO Securitization Fund. You can learn more about what VWAP is and what it is used for in the PDF attachment to this post.
The EHGO Fund will have the option to convert the bonds at any time during the year following the date of issuance, after which time conversion will occur automatically into new or existing Induct shares.
About Induct Software
Induct Software offers a digital platform for organisations to facilitate the efficient management of processes and projects that are knowledge-based. Additionally, Induct provides a secure network based in the Cloud that enables these organisations to share knowledge, collaborate and communicate effectively.
The innovation management methodology used by Induct Software has been developed over several years, based on observations of successes and failures across a broad spectrum of industries. The methodology demonstrates how approaches and processes successfully used by leading organisations can be used to drive innovation when adopted by others and adapted effectively to suit specific needs.
About Alpha Blue Ocean
Alpha Blue Ocean wholly owns, manages and advises the EHGO Securitization Fund. ABO is not a trading firm, but a sector agnostic firm for financing alternative investments in the Real Economy. ABO works to provide SMEs with innovative financing solutions that are company-friendly and smart, providing structured partnerships and investments that are pragmatic and flexible and span all asset classes.
Recent statistics on the global convertible bonds market can be found in the embedded infographic.