Insig AI plc (AIM: INSG), the data science and machine learning solutions company serving the asset management industry, is pleased to announce it has entered into a conditional share purchase agreement to acquire the entire issued share capital of FDB Systems Limited (“FDB Systems”) (the “Acquisition”).

FDB Systems specialises in the collection and structuring of financial market data for investors and other capital markets participants. Integrating FDB Systems’ data ingestion and structuring technology with Insig AI’s storage, visualisation and machine learning optimisation capabilities will allow the Company to offer a complete end-to-end financial data solution to its customers. For more than 18 months, Insig AI has been a customer of FDB Systems and therefore has a close appreciation of its recent revenue growth and prospects.

About FDB Systems

FDB Systems, headquartered in London, was founded in 2019 to provide data and data solutions to hedge funds, asset managers, and private market investors. FDB Systems specialises in structuring data, which is the process of transforming raw data so that it can be more easily and effectively used as an input to machine learning, data science and AI processes. In addition, FDB Systems owns FilingDB. FilingDB is the first productised source of global company filings optimised for Natural Language Processing (“NLP”) use cases. FilingDB aggregates, parses and structures information including annual reports, interim reports and press releases enabling users to access relevant data more easily.

The unaudited accounts of FDB Systems for its financial year ended 30 April 2021 show revenue of £63,000 and loss before tax of £48,000. For the six months to 31 October 2021, the draft unaudited management accounts of FDB Systems show revenue of £127,000 and a loss before tax of £25,000. The unaudited cash balance of FDB Systems as at 31 October 2021 was £147,000. FDB Systems currently has six full time employees and two part time employees. For the calendar year to 31 December 2022 (“CY22”), FDB Systems is forecasting third party revenues of £0.9 million and £1.7 million for the year ending 31 December 2023. These revenue targets form the basis of the deferred consideration thresholds, as detailed in the section below.

FDB Systems is expected to generate a small operating profit in the calendar year to 31 December 2021 which is forecast to grow strongly as revenues increase in CY22 and beyond.

Terms of the Acquisition

The Company will pay to the selling shareholders up to £10.0 million comprising:

• £0.3 million initial cash consideration payable on completion;
• £3.7 million initial equity consideration comprising 7,022,471 new ordinary shares of 1 pence each in Insig AI (“Ordinary Shares”) at a price of 52.688 pence per share, being the volume weighted average price of the Ordinary Shares over the 30 business days preceding the signing of the conditional share purchase agreement on 17 November 2021 (“the VWAP”) (the “First Consideration Shares”) and deferred consideration based on revenue projections comprising:
  • Year one deferred cash consideration of up to £0.76 million and deferred equity of up to 4,251,442 Ordinary Shares (equating to up to £2.24 million based on the VWAP) conditional upon minimum revenue of £0.9 million being generated by FDB Systems during the 12 month period from 1 January 2022 to 31 December 2022; and 
  • Year two deferred cash consideration of up to £0.9 million and deferred equity of up to 3,985,727 Ordinary Shares (equating to up to £2.1 million based on the VWAP) conditional upon minimum revenue of £1.7 million being generated by FDB Systems during the 12 month period from 1 January 2023 to 31 December 2023.

Based on this revenue forecast for the year ending 31 December 2023, FDB Systems is being acquired on just under six times third party revenues.

Should audited third party revenues fail to exceed 75% of target, no more than 33% of deferred consideration will be paid. If audited third party revenues fail to exceed 50% of target, no deferred consideration will be payable.

The Acquisition is conditional upon admission of the First Consideration Shares to trading on AIM. The Acquisition will constitute a substantial transaction under the AIM Rules for Companies and will be funded out of existing cash resources.

Steven Cracknell, Insig AI CEO, said:

“Our clients and our sales prospects are clear: access to structured data fast tracks our sales process. FDB Systems has world-class technology to ingest and make sense of the huge quantity of text-based disclosures and information available, which is otherwise very unstructured and difficult to access. Combining its technology with our machine learning and analysis tools creates a world-leading aggregator of ESG information.

“Using our BERT-based NLP classifiers and easy to use web tools, we can now provide a total solution to fund managers that makes it simple for them to interrogate the vast volume of available ESG data but which is difficult to access with any transparency. Rather than analyse each prospect’s portfolio piecemeal, now being able to cover a broad universe of companies will enable us to shorten the duration of demonstrating results.

“Having worked with the FDB Systems team led by Simon Mahony for some time, we are delighted to be integrating them fully into Insig AI. As well as complementary and synergistic benefits, we will now be able to access FDB Systems’ client list and growth.”

Simon Mahony, FDB Systems CEO, said:

“Over the year and a half that we’ve been working with Steve and the team at Insig, we’ve seen first-hand the quality of the team and technology that they’ve put together. We are delighted to be combining with them when our businesses are so clearly complementary and where the opportunity in front of us is so compelling.”

Total voting rights

Application has been made to the London Stock Exchange for admission of securities in respect of the First Consideration Shares. It is expected that admission of the First Consideration Shares to trading on AIM will become effective on 23 November 2021 (“Admission”).

Following Admission, the total number of ordinary shares and voting rights in the Company will be 105,675,645. The Company does not hold any shares in treasury.

The above figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.