Tekcapital shares gained on Monday after the UK-based intellectual property investment group issued a year-end portfolio update and affirmed its plans to return capital to shareholders through special dividends.
Tekcapital reported a 38% increase in its investment portfolio value to $64.2 million in 2024, significantly outperforming market benchmarks and peer companies during the year.
The company’s strong performance is reflected in its share price growth of 27% during 2024, substantially outpacing both the AIM All-Share Index, which declined 5.5%, and the FTSE 250, which gained 5.69%.
This growth was driven by achieving key milestones for portfolio companies, including the successful public listing of two portfolio companies, MicroSalt plc and GenIP, on the AIM market.
MicroSalt had a rip-roaring start to life as a listed company, with shares tripling before falling back. The low-sodium salt technology company announced a ten-fold increase in projected volumes at the beginning of 2025, setting MicroSalt up for another promising year of growth.
The company supplies one of the world’s largest snack food companies with its low-sodium products. It has signalled that the relationship is expanding by announcing increased volumes towards the end of last year, which were followed by encouraging projections. The snack food company remains unnamed, presumably due to the commercial sensitivities of adopting MicroSalt’s technology.
GenIP was listed during a challenging period for the wider market in late 2024 and has set about ramping up its AI-enhanced analytics services aimed at the technology transfer industry. GenIP announced a record order and fresh commercial relationships since listing.
With the listing of GenIP and MicroSalt, four out of Tekcapital’s five portfolio companies are now publicly traded, with the fifth company, Guident, the autonomous vehicle safety company, preparing for a NASDAQ listing in 2025.
Guident may prove to be the jewel in Tekcapital’s crown. Tekcapital is preparing to list Guident at a crucial juncture for autonomous vehicles created by the wider adoption of the technology. Peers listing in the US are attracting bumper valuations, and everything points to a very favourable IPO for Guident.
“We are excited to provide this 2024 summary report which describes a few of our portfolio company achievements and their contribution to our profitability and growth. In 2024 our unaudited net assets reached US$65.1m, an increase of ~36%, over the previous year, with an NAV per share of US $0.31 or £0.25,” said Dr. Clifford M. Gross, Chairman.
“Our performance reflects strong commercial progress through the completion of two AIM listings (MicroSalt plc & GenIP plc) which we are keen to hold. As a result of this progress, four of our five portfolio companies are now listed. Additionally, we observed significant commercial traction for Innovative Eyewear Inc. as they achieved several new product and go-to-market milestones. We were also pleased to note Microsalt has received new and follow-on B2B orders from a major snack food manufacturer. Further, we believe that Guident Corp’s commercial advancements coupled with improving market conditions in the autonomous vehicle industry, have created the ideal opportunity for Tekcapital to further crystalise its balance sheet in 2025.
The Tekcapital Chairman continued to explain the group’s strategy and objective to return capital to investors through special dividends:
“Tekcapital’s core business objective is to grow its net assets and return material levels of capital generated from its portfolio companies’ successes to shareholders via special dividends. As ever, we remain committed to this objective, and our portfolio companies’ progress in 2024 means we have taken strides forward in delivering on our long-term strategy,” Gross explained.
Despite Tekcapital’s strong performance, the stock currently trades at a 64% discount to its Net Asset Value (NAV), a larger gap than its industry peers. For comparison, Molten Ventures plc trades at a 52% discount, IP Group plc at 45%, Frontier IP Group plc at 35%, and Mercia Asset Management plc at 25%. The industry average discount for UK closed-end funds in 2024 was 16.6%, according to Morningstar.
This discount may prove to be an opportunity for investors as general market sentiment improves and Tekcapital completes the Guident IPO, which could significantly increase Tek’s net asset value.
In addition, the company maintains a notably efficient operation, with administrative expenses of just US $2.2 million in 2024, the lowest among its peer group. This lean structure, combined with its strategic focus on a select number of portfolio companies, has contributed to its strong financial performance.