Tekcapital shares were higher in early trading on Wednesday after the technology group announced a 46% jump in NAV and hinted at the IPO of portfolio company Guident.
“We are excited to report significant progress across our portfolio companies. This has resulted in the growth of our Net Assets during the period by ~ 46% reaching US$69.8m with an NAV per share of US$0.35,” said Dr. Clifford M. Gross, Tekcapital Chairman.
“Our first half performance reflects strong commercial progress of the portfolio companies during the period. I’m delighted that each portfolio company has grown its respective revenues this year, validating our investment case for each company and the Tekcapital investment process.”
Microsalt, the low-sodium technology company, accounted for a large proportion of the NAV gains after it listed in London in February this year. The company has agreements with one of the world’s largest snack foods businesses to supply low-sodium salt, as well as extensive retail distribution channels.
Following MicroSalt’s successful listing earlier this year, Tekcapital is moving forward with its strategy of creating shareholder value through achieving portfolio company liquidity events by launching AI analytics company GenIP.
“As part of our strategy to create value from innovative technologies, we launched GenIP this summer. We feel its forthcoming IPO will provide UK-focused investors with a unique opportunity to secure exposure to the fast-growing Generative AI analytics market,” Gross said.
The surprise proposed GenIP IPO will add around £5m of liquid NAV to the portfolio.
Guident IPO
Investors who see Guident as the jewel in Tekcapital’s crown will be delighted to see the Tekcapital group Chairman hint at a listing after noting revenue-generating progress for the autonomous vehicle safety company.
“Guident has made material progress in commercialising its autonomous vehicle safety solutions, and revenue generation has increased accordingly,” Gross said.
“We believe improving market conditions and Guident’s commercial advancements are creating the ideal opportunity for Tekcapital to crystalise the balance sheet value held in the company while providing a greater pool of investors the chance to join us in the next phase of Guident’s scale-up. As previously announced, Guident is seeking a private investment round and, once consummated, should have the investor support for a range of possible future funding opportunities, including an initial public offering.”
Guident was valued at just $18m, leaving plenty of space for a higher valuation on listing given the size of the addressable market and Guident’s SaaS model, which provides recurring revenues.
Portfolio management
In this update, Tekcapital alluded to taking a measured approach to managing its portfolio. Although nearly all of Tekcapital’s technology companies are now listed, the company clearly still has a desire to capture new opportunities.
Interestingly for investors, the Tekcapital board has also displayed flexibility in their approach to creating value for shareholders, which is likely to expedite returns. The company has previously opted to found companies and provide seed capital directly into them. The approach to GenIP is different because the first major funding round is the upcoming IPO.
This does two things. First, it allows investors to gain exposure to the company in the early stages when the company grows rapidly. Second, it reduces reliance on Tekcapital for growth capital.
Dr Clifford Gross said that the company is at ‘an inflection point’ and shares have reacted accordingly on Wednesday.