October 19, 2023: Karmine Corp seals its fundraising as
part of the acquisition of the LEC slot. This is materialized through a capital increase of 3,851 shares, raising the capital from 12,856 to 16,437 shares in total, which represent an increase of 27.85% of the capital.
The shares will be associated with a share premium of €1,229, which brings the fundraising to a total amount of €4,401,049. This will cover only the price of the first installment payment of the LEC slot of Astralis(1).
What is a share premium? Consider it as the additional price to be paid by the new investor to compensate for the valuation gained by the company over time. In the case of the Karmine Corp, the company is now worth "1,229 times more than at its launch".
A special feature of the shares issued by Karmine Corp SAS is that they include a Ratchet clause. This clause allows the investor to protect themselves from a possible devaluation of their shares. Attached to the share, the BSA Ratchet stipulates that in the event of a decrease in the next round of investment, the investor can obtain new shares to reduce the average acquisition price as much as possible and thus limit their losses (in our case, 1 BSA Ratchet allows to obtain 5 shares within the total limit of 10,743, which represent 53% of the capital).
Impact on Ownership
As you know, the increase in capital creates a dilution of the holding percentage of the historical shareholders. To calculate the new distribution of capital, it is important to recall the history of the share distribution made during 2023.
Before: 65% or 8,356 shares for Kameto and 35% for KELAWIN (Prime, Souley) or 4,500 shares.
After (considering an equal dilution): an increase of 27.85% for the fundraising which is a dilution of 13.92% of ownership per historical associate which means 51.08% for Kameto and 21.08% for Prime and Souley.
We note that following the fundraising, Kameto remains the majority shareholder of Karmine Corp, and that the historical shareholders still hold 72% of the share capital.
Valuation of Karmine Corp
You may have guessed, knowing the share premium allows us to know the valuation of Karmine Corp to date, the basis used to determine the fundraising.
The basis for the valuation calculation is as follows: number of shares after increase * by the nominal issue value (1,229) attributed i.e. 16,437 shares * 1,229 = €20,201,073.
As of October 2023, Karmine Corp is therefore valued at €20.2M, far from the American valuations of several hundred million euros, but probably more realistic.
Future and Strategy:
The interest for Karmine Corp in having carried out a partial raise and a staggering of slot payments is to bet on an increase in value over time in order to allow for a lower dilution for an equivalent amount raised.
For example, if the valuation decided in 2024 is no longer €20M but €30M, considering a growth of 50%, to raise again €4M, the company will only dilute 14% of its capital against 27.85% previously. It is therefore necessary to prepare for a new fundraising in the year 2024 by observing the variation in valuation as a major financial future challenge for the club.
The interest for the investor is thus to bet on a strong development of the club to see the value of their shares today of €4,401,049 for 3,851 shares (27%) increase significantly.
(1) As a reminder, the deal includes a first part of the sale amounting to €17M for 66% of the asset value. We can therefore conclude that the first payment of €4.4M will cover a quarter of the total to be paid by 2025, the payment plan specifying a settlement due in 2025, it will be necessary to still pay approximately €12.7M to Astralis over the next two years.
Source: French Commercial Registry
