The UK Government, through the British Business Bank’s Future Fund scheme, has converted a loan into an equity stake in Shojin, a rapidly growing real estate investment platform.
This move comes as part of the Future Fund’s initiative, launched in 2020 to bolster emerging businesses during the Covid-19 pandemic.
The Future Fund, designed to match new private investments on a pound-for-pound basis up to £5m, stipulated that if a business secured more funding than the initial amount, the debt and interest would automatically convert to equity.
Shojin, having secured additional capital, witnessed this conversion, with the Future Fund’s initial investment of £860,000 (part of a £1.72m funding round) transforming into equity.
This process allowed investors, including the Future Fund, to convert to shares at a 20% discount on the lowest subsequent sales price, with interest converting at a 10% discount. Consequently, the UK Government now holds a 5.16% equity stake in Shojin.
Noil Porter, chief financial officer at Shojin, said: “Shojin has grown significantly in the past few years with the share price increasing from £500 to £1,029 per share. We forecast a 5x to 8x growth in the next few years, so this has been, and will continue to be, a very good investment for the Future Fund. Their investment will grow along with other shareholders.
“The funding has helped significantly because it came as debt and allowed us to navigate through the challenges of the pandemic. The Government has benefitted from a 57% increase in its share value over 36 months.
“This is a real success story for Shojin, our investors and the UK Government. We are delighted to be adding significant growth in value to all our investors including the UK Government.”
