Finax has significantly strengthened its capital
The investment holding of the foundation, founded and financed by Ivan Chrenko, has increased its investment in Finax by another EUR 1,5 million, thus significantly strengthening Finax's capital. Finax also plans to use this investment to develop a ground-breaking personal finance management app, which is planned to be launched after the summer.
It was the year 2019 when we at Finax announced the largest fintech investment in the history of Slovakia. During the last two years, we have managed to meet the goals and in many areas, we have even significantly exceeded the expectations that were set at the time of this investment.
Thanks to this, over the last year, we have received dozens of offers from venture funds to finance further expansion. However, after much deliberation, we have decided to accept the offer from the investment holding of the Ivan Chrenko Foundation, our main investor who has strengthened his position in Finax.
One of the reasons why we decided to accept the Ivan Chrenko Foundation offer was the fact that its main purpose is to finance non-profit activities - currently the LEAF Academy project. We like to be part of this vision that the profits generated (also) by our company will one day provide quality education and with it a better future for our children.
As part of our open communication, I will explain you the details of this transaction.
The value of Finax has grown almost 8-fold in 2 years.
With an investment of EUR 1,5 million in 2019, the Growws Sicav fund (in which investment holding of the Ivan Chrenko Foundation's had a majority stake) acquired a 50% stake in Finax. Two years ago, the value of Finax was set at €3 million and I, as the founder of Finax, was left with the remaining 50% stake.
Over the past few weeks, a series of transactions have taken place through which the holding company of the Ivan Chrenko Foundation has purchased the stake of the Growws Sicav fund (the original shareholder of Finax), while at the same time, the foundation increased its investment in Finax by additional EUR 1,5 million, at the company value of EUR 23,25 million.
Due to the fact that over the last two years some of the shares were also acquired by Finax employees, the investor's stake has increased only slightly from the original 50% to approximately 52%.
Nothing will change in terms of decision-making
Changes in the voting rights of the company were also part of the shareholders' agreement. By amending the company statues, the quorum of the General Assembly was increased to 66%, which means that any changes to the company must be approved jointly by the two main shareholders, just as before.
Over the next few months, two new members will join the Board of Directors of Finax. However, the decision-making will continue to be fully in the competence of the Finax management, which is backed by the original founders, Juraj Hrbatý and Radoslav Kasík. Thus, the direction of Finax will not change.
What does this investment mean for Finax?
Since our foundation, which took place 3,5 years ago, Finax has achieved incredible results. As Finax is currently managing more than EUR 166 million for almost 23 thousand clients, we are one of the most successful robo-advisors in Europe.
What makes us even more special is the fact that we do not plan to spend most of the new investment at all. So how will we utilize this investment?
1) EUR 500 000 will be used to increase the company's capital, which will take place next spring after the 2021 financial statements audit. Finax wants to strengthen its capital in order to meet the strict legal capital requirements associated with the continuous growth in the future.
2) EUR 500 000 will be used to increase the company's reserve fund. These will be the funds that Finax will hold in its accounts for a long term and they will serve as a reserve in the event of a significant drop in revenues resulting from potential market fluctuations. What exactly does this mean?
Finax's revenues are directly derived from the value of our customers' assets. If there is a downturn in the stock markets in the future, the value of assets under management will decrease, which would also negatively impact the company's revenues. Thus, a significant market correction could adversely affect the company's operations. By increasing the reserve fund, Finax will be responsibly prepared even for such scenario.
3) €500 000 will go towards the development and deployment of a personal finance management app. As was stated last year, Finax was the first entity in Slovakia to obtain permission from the National Bank of Slovakia to access clients' bank accounts with their consent. The application will be provided as a standalone service and will be a breakthrough tool for managing personal finances of Slovaks.
The development of the app is already in full swing and it is expected to launch after the summer. Thanks to the app, clients will be able to automatically synchronise all family accounts from multiple banks into one app. The app will then categorise the expenses and provide clients with important data, so they can manage their family finances more effectively.
One of the features will also be the ability to compare their expenses with the average Slovak household based on selected categories. This will give the users a better overview of, for example, where their family finances are lacking and where there is room for further improvement.
Finax is not one of the numerous start-ups in the field, which are characterized by burning through the acquired investments. All of Finax's expenditures and costs to date have been in accordance with the set plans, have been prudently managed and, more importantly, have borne fruit.
The investment acquired in the past has been used for expansion and technological innovation, which positively affected the achieved results. The utilization of the acquired capital has been spread over three years and even to this date, and even to this day, we have used it to partially cover the expenses.
The company's loss for the last year was fully financed by the investment received from Ivan Chrenko. The purpose of investment in a company is to develop its business and to achieve this goal, it must be used, which means that companies financed by external capital are in the red.
Finax still has many ideas and great visions that we would like to present in the future. All of them are aimed at providing better services, vertically and horizontally expanding our services, from which will ultimately benefits our clients.
Our goal is to be a leader in the financial market, to be a comprehensive online advisor for your personal finances and a partner for your money. We want to continue developing new services that will help your family budgets and you on your journey towards financial security and freedom. All of our activities have had this goal in mind.
Additional resources were required to accelerate the fulfilment our vision. However, nearly 23 000 Intelligent investors have benefited from this acceleration. The first investment by the investment holding of Ivan Chrenko Foundation covered all the costs Finax incurred in order to reach the tipping point.
The second round of funding follows the relentless drive to stay one step ahead. Additionally, it will increase the stability of Finax. A more robust balance sheet and greater capitalization will enhance our credibility and brand strength. The new investment, at a significantly higher evaluation, is also a strong signal from a key shareholder towards Finax, demonstrating their confidence in the company's management and meeting the set expectations.
Despite the funding received, we will also end this year in red due to the utilization of a portion of it to develop a breakthrough application. However, we are already approaching balanced finances, i.e. revenue equalling costs. We plan to get into the black on a monthly basis at the end of this year.
I believe that by increasing our own resources, we will further increase your confidence in Finax and its long-term plan to efficiently manage all of your financial assets.
Thank you for your trust.