Tap Global Group PLC – AIM Admission/Cancellation of AQSE

Tap Global Group PLC has announced its admission to the AIM market, effective from October 30, 2023, while simultaneously cancelling its listing on the AQSE Growth Market. This strategic shift aims to enhance the company's visibility and access to a broader pool of investors, aligning with its growth ambitions in the digital currency space. As part of this transition, Tap Global Group has also indicated that it will be issuing 12 million new ordinary shares at a price of 10 pence per share, raising £1.2 million in gross proceeds. This capital infusion is intended to support the company's ongoing operational and expansion plans, particularly in enhancing its digital wallet services and cryptocurrency trading platform.

Historically, Tap Global has operated within a niche segment of the financial technology sector, focusing on providing a comprehensive digital banking solution that integrates cryptocurrency services. The decision to move to AIM comes at a time when the company is looking to capitalize on the growing interest in digital assets and the increasing demand for integrated financial services. By listing on AIM, Tap Global aims to leverage the market's reputation for supporting innovative and high-growth companies, which could potentially enhance its valuation and investor appeal. The company’s market capitalisation post-admission is expected to be approximately £12 million, placing it within the AIM micro-cap tier.

In terms of financial position, the £1.2 million raised from the share issuance will bolster Tap Global's cash reserves, which are critical for funding its operational activities and strategic initiatives. However, the issuance of new shares raises concerns regarding potential dilution for existing shareholders. The current cash position, alongside the anticipated burn rate, will be crucial in determining the company's funding runway. If the company maintains a quarterly burn rate of around £300,000, as suggested by previous reports, the new funds could provide a runway of approximately four months, assuming no additional revenue generation during this period. This highlights the importance of swift execution on growth initiatives to ensure that the company does not face a funding gap in the near term.

Valuation metrics for Tap Global, based on the anticipated market capitalisation of £12 million, suggest a relatively modest entry point for investors. Comparatively, direct peers within the AIM micro-cap sector include companies such as Coinfloor Ltd (AIM: COIN), which has a market capitalisation of approximately £15 million, and CEX.IO (not publicly listed but similarly sized), which operates in the cryptocurrency exchange space. While precise valuation metrics for these peers are not publicly available, the general market sentiment towards cryptocurrency-related businesses remains cautiously optimistic, particularly as regulatory frameworks continue to evolve. The valuation for Tap Global, based on its market cap, suggests it is positioned competitively within this micro-cap segment, although the inherent risks associated with the cryptocurrency market must be carefully considered.

Execution risk remains a significant concern for Tap Global, particularly in light of its ambitious growth plans. The company has previously faced challenges in scaling its operations and achieving profitability, which raises questions about its ability to meet future milestones. The transition to AIM could provide the necessary exposure and credibility to attract institutional investors, but it also places additional pressure on management to deliver results. Furthermore, the cryptocurrency market is notoriously volatile, and any adverse regulatory developments could impact the company's operations and market perception. The next measurable catalyst for Tap Global will likely be the successful deployment of the new capital raised, with a focus on enhancing its digital wallet capabilities and expanding its customer base. This is expected to be assessed over the next six to twelve months as the company implements its growth strategy.

In conclusion, Tap Global Group's admission to AIM and the accompanying capital raise represent a strategic move aimed at enhancing its operational capacity and market presence. However, the potential for dilution and the challenges associated with execution and market volatility must be carefully weighed by investors. The announcement can be classified as moderate in materiality, as it does not fundamentally alter the company's valuation but does provide a clearer path for growth and increased visibility in the marketplace. The success of this transition will ultimately depend on the company's ability to effectively utilize the new funds and navigate the complexities of the cryptocurrency landscape.

Key insights

• ●Tap Global raises £1.2 million through share issuance.
• ●Company transitions from AQSE to AIM for better visibility.
• ●Execution risk remains due to market volatility.

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