- Investment sought:
- Equity offered:
First and foremost, we would like to thank you for your continued support as we build The Good Bank. We have seen numerous obstacles thrown at us over the past year but in overcoming them we have become stronger, and we are ready to tackle 2018 head on with a public launch, the release of multiple credit and savings products, and a renewed determination to make a difference.
Our acquisition of Harrods Bank has provided us with a banking licence, £25m in equity funding into Tandem, £55m of additional regulatory capital within the combined group, a £375 million mortgage book and over £400 million in deposits. This deal makes us the leading contender in the digital challenger space at a revenue level with a strong balance sheet and puts us in a great position to start rapidly acquiring customers this year.
Following the failure to complete the House of Fraser deal due to Chinese regulatory issues, the Harrods Bank deal provided the means to continue our journey. In the interests of full transparency, it is fair to say that without it we would not be a regulated bank and we would have little hope of building The Good Bank that will revolutionise the banking industry. Without it, we would have failed both our mission and you, our investors.
Structure of the Deal
The consequence of the above is that Tandem Bank is now full steam ahead. However, that comes at a cost in that the additional investment has affected our share price. As part of the deal, it was agreed that Tandem would raise a total of £25 million in additional equity capital. Of this, £10 million was raised at signing of the HBL transaction through convertible loan notes from new and existing investors. A further £15 million of equity capital was envisaged to be raised between signing and closing the deal. Qatar Holding LLC committed to invest any shortfall up to £15 million to provide certainty to our business plan and regulatory approvals. This is referred to as the "Underwrite". We had hoped to raise capital at a more attractive share price than £0.6071 and we entered into discussions with a number of interested potential investors but we were not able to close those offers before the Underwrite date and merger agreement would have lapsed. The lower share price, in addition to the shares issued in exchange for Harrods Bank Limited, resulted in a significant dilution to existing shareholders including Seedrs investors, founders and management.
Although the dilution is disappointing and pre-emption rights were waived, we have agreed to offer you an opportunity to offset this at the same share price as the shares issued to Qatar Holdings as part of the Harrods Bank acquisition and cash investment. This round allows you to counteract the dilution arising from the £25 million of new equity capital by investing in new shares at £0.6071. Please note that this offer is to ensure equal treatment but not to raise material additional capital which has already been achieved through institutional round. In fairness to all shareholders, the maximum pro-rata entitlements have been set in proportion to the Shareholders’ total shareholdings in the company as at 9th January 2018 (before the closing of the latest round of investment).
We believe we are well placed to build value in Tandem following the acquisition of Harrods Bank and subsequent introduction of a strong balance sheet. We are building our aggregation app around open banking and PSD2.0 which came into effect on 13 Jan 2018. With regards to our product offering, we are now moving on from beta mode on our app having recently removed our public access waitlist. We have also started rolling out a travel cashback card, ranked as a “Top Pick” by Money Saving Expert, to the general public. Additionally, we will offer to renew mortgages for existing Harrods customers, providing us a stable source of revenue.
In the coming months, we will be launching our fixed term savings account, and an in-app savings coach functionality to support customers. To complement this, we will also be launching our personal loans product at the end of the year. Ultimately, our ethos and strategy, should see Tandem go from strength to strength in the years ahead.
Details of the Offer
• The offer is for new Ordinary B Shares at a price of £0.6071 per Ordinary B Share payable in cash ("New Ordinary B Shares"). There are no other preferential equity rights outstanding which would subordinate the equity in the Company and the same as those issued on 10 January 2018 at completion of the deal to acquire Harrods Bank Limited.
• The nominal value of a New Ordinary B Share is £0.002
• The New Ordinary B Shares will, when issued and fully paid, rank pari passu in all respects with the Ordinary B Shares issued at closing, including the right to receive in full all dividends and other distributions declared, made or paid by reference to a record date after the date of their issue.
• Your shares will continue to be held by Seedrs on your behalf