30th Mar 2007 07:01
Braveheart Investment Group plc30 March 2007 Braveheart Investment Group plc ("Braveheart" or the "Company") COMPLETION OF £6.64 MILLION PLACING ADMISSION TO AIM AND FIRST DAY OF DEALINGS Braveheart, a venture capital and investment management business which has aproven track record of delivering attractive returns through investments incompanies which commercialise intellectual property, announces today that it hasraised approximately £6.64 million by way of a placing and that its shares willcommence trading on AIM today, under the symbol BRH. Braveheart has placed 3,991,020 new Ordinary Shares at a price of 160 pence pershare and will have a market capitalisation, at the Placing price of £21.45million. Panmure Gordon & Co Limited is nominated advisor and broker to theCompany. Key Points • The Group's structure provides it with a mix of regular revenue streams from investment management fees and exceptional income through the realisation of investments upon exit. • Investments are made in young, emerging, unlisted companies where there is potential for significant growth. • Investments are typically focused on British companies with potential global technology solutions. • Investment opportunities mainly arise from Braveheart's extensive network of contacts, which includes close relationships with universities and innovation centres. • An equal investment made in every portfolio company since the Group's formation would have generated an average compound return of 37 per cent. per annum on realised investments. • Of the 16 portfolio investments realised so far, five have been by way of IPO, and three have been by way of trade sale or secondary purchase. Eight have been written off. • In November 2005, Uberior Investments plc (a subsidiary of the Bank of Scotland) subscribed for 10 per cent. of the enlarged share capital of the Company, providing the resources for the Group to commence making significant investments alongside its clients. • The net proceeds of the Placing will be used to: - increase direct investment; - invest in captive university funds which the Group will manage; and - acquire assets where the Group believes it can add value. • The Group has been profitable for its last three financial years. This has been achieved without any significant contribution from directly owned investments, which have only recently become material. Background The Company grew out of a business which was originally formed in 1997 by fourScottish businessmen as a co-investment vehicle which would allow them to pooltheir money and knowledge, increase diversification and also reduce risk. Itmakes investments in young, emerging, unlisted companies where there ispotential for significant growth. Use of proceeds Braveheart will use the funds raised to increase its capacity for directinvestment and to allow it to invest in and manage captive university funds,such as the £12 million Strathclyde Innovation Fund, which the Company recentlyannounced it had agreed to set up with the University of Strathclyde. As thefund's manager, Braveheart has the exclusive right of first refusal on allcommercial investment opportunities emanating from the University. The Companymay also seek to acquire underperforming assets, where it believes it can addvalue. Investments Typically, Braveheart's investments are focused on British companies withpotential global technology solutions. However, the Group also maintains limitedexposure to more traditional businesses. Braveheart's portfolio ranges fromstart-up businesses to companies which are close to an IPO or sale. Each year,out of several hundred business plans received, around ten investments are made,all of which demonstrate attractive exit potential. These opportunities emanatefrom Braveheart's network of contacts, which includes close relationships withuniversities, innovation centres, and the Group's own clients. (A list of someof the Group's investments can be found in the notes to editors). Investments are often made alongside or in joint venture with large financialinstitutions, such as the Bank of Scotland and non-governmental organisations. Financial results The Group's business is structured so that its revenues are diversified betweenregular income, from investment management fees, and exceptional income, throughthe realisation of investments upon exit. It has been profitable for the lasttwo financial years, without any significant contribution from its directlyowned investments. In the financial year ended 31 March 2006, Braveheartgenerated pre-tax profit of £151,657 (2005: £25,268) on a turnover of £528,474(2005: £334,774). Clients The Group currently has approximately 100 discretionary and active high networth clients who, as well as investing funds, frequently provide: • secondary pre-investment due diligence• management skills and business development expertise• a pool of executive and non-executive directors; and• further investment opportunities. Direct investment In November 2005, Uberior Investments plc (a subsidiary of the Bank of Scotland)subscribed for 10 per cent. of the enlarged capital of the Company. Thisprovided the resources for Braveheart to commence making significant investmentsalongside its clients. As at 26 March 2007, Braveheart has made its first threerealisations, for its own balance sheet, which have generated a compound returnof 110 per cent. per annum. Commenting, Geoffrey Thomson, Braveheart's chief executive, said:"We are delighted to have completed our admission to AIM. Our flotationsignifies the start of the next stage of development for Braveheart and we haveexciting plans for the growth of our business; we plan to do more work with ouruniversity partners, increase direct investment from our balance sheet andexpand via acquisition where we can see opportunities in which we can add value. "We are delighted that the public will now be able to participate in what we aredoing by holding shares in our company, and we are looking forward to developingand strengthening our business." Geoffrey Thomson Richard Gray Richard SunderlandChief Executive Katherine Roe Rachel Drysdale Simon HudsonBraveheart Investment Group Panmure Gordon & Co Tavistockplc CommunicationsTel: 01738 587 555 Tel: 020 7459 3600 Tel: 020 7920 3150 NOTES TO EDITORS: BOARD OF DIRECTORS Garry Watson OBE CA, Chairman - aged 66.Garry was formerly a Managing Director of Hill Samuel Bank (Head of InvestmentFinance), Legal Services Ombudsman for Scotland and a Governor and DeputyChairman of the Macaulay Land Use Research Institute in Aberdeen. He iscurrently a Director and Chairman of the Audit Committee of Places for PeopleGroup, a major UK provider of mixed tenure housing. Geoffrey Thomson, Chief Executive Officer - aged 48.One of the founders of Braveheart, Geoffrey has a track record as a deal makerand business angel. He has run his own venture capital backed group of companiesand spent five years working as a company doctor specialising in restructuringand refinancing of small to medium sized enterprises. Geoffrey writes columns oninvestment for various national broadsheets and regularly speaks at businessevents in Scotland. Carolyn Smith ACIS, Investment Director - aged 42Carolyn has an honours degree in accountancy from the University of Stirling andis a Chartered Secretary. She spent five years working in insolvency beforemoving to business development and investment. After five years working inprivate equity she joined Braveheart in 2000. Edward Cunningham CBE, Non-executive Director - aged 75.Edward has UK and international industry experience, including a period with theWorld Bank. Latterly, he was Director, Industry and Enterprise Development withthe Scottish Development Agency. More recently, he has been chairman of a numberof 3i-invested companies. He has also been a Director of TSB Bank Scotland andWatson & Philip. He is currently chairman of two companies and has his ownconsultancy business. Donald Turner CA, Non-executive Director - aged 62.Donald was Managing Partner-Regions and Managing Partner for Scotland andNorthern Ireland for Ernst& Young LLP and retired from that firm as Regional Chairman Scotland in 2001. He is a past Chairman and Board Member of the Scottish Council for Development and Industry and was a Non-Executive Director of Young Enterprise Scotland. He is a former Council Member of the Institute of Directors and a past Chairman Scotland of The Princess Royal Trust for Carers. He is currently Convenor of the Audit and Risk Management Committee of The National Trust for Scotland. Shonaig Macpherson CBE FRSE, Non-executive Director - aged 48.Shonaig joined the board of Braveheart in October 2005. She has recently retiredas senior partner of McGrigors, one of Scotland's leading legal firms. Shonaigis currently Chairman of the Scottish Council for Development and Industry,Chairman of ITI Scotland Ltd, a Non-executive Director of the ScottishExecutive's management board, a Fellow of the Royal Society of Edinburgh andChairman of The National Trust for Scotland. Investment Schemes SMART Equity Scheme The SES is a joint venture between Braveheart, the Bank of Scotland and a numberof Scottish universities. The SES was established to assist companies that havebeen formed to exploit IP created within the universities by providing them withthe necessary funds and management support to commence commercial operations. SES addresses the difficult issues of how to provide, in a cost effective way,management support and a small seed round of equity to companies emerging fromthe university. SES leverages the SMART award from the Scottish Executive, whichpays for up to 75 per cent. of the cost of carrying out a technical andcommercial feasibility study lasting between 6 and 18 months, up to a maximum of£50,000. It is a condition of the SES that, to be eligible for funding, acompany must have secured a SMART award. The Group has also negotiated reduceddeal fees for professional advisers, so that minority protections and corporategovernance regimes can be instilled from the outset without significantlyreducing the funds available to the spin-out companies. In addition to funding, the Group provides experienced investors/managers to actas non-executive directors on the boards of the investee companies. Theseinvestors/managers assist with corporate development and assist the companies toprepare for more substantial funding. To be considered for funding under SES, a company must, in addition to havingbeen awarded a SMARTaward, be affiliated to one of the following universities or innovation centres: • University of Dundee;• University of Edinburgh;• Heriot-Watt University;• Robert Gordon University;• University of St Andrews;• University of Strathclyde;• Hillington Innovation Centre; or• The Alba Centre. Braveheart's first ten investments made under SES were delivered by way of theSMART Fund. Subsequent investments made under SES will be delivered by the AlphaEIS fund, which is discussed below. Proof of Concept Scheme The Scottish Enterprise Proof of Concept grant programme is an initiativeawarding grants to assist the precommercialisation of emerging technologies fromScotland's universities, research institutes and NHS boards. Its goal is to helpresearchers take their ideas and inventions out of the laboratory and developthem commercially into smart, innovative businesses, helping to plug the gapbetween academic research and full commercialisation. In June 2005, Braveheart announced a new initiative to complement the Proof ofConcept grant programme administered by Scottish Enterprise. The initiativecomes under the title of PoC. PoC makes provision for the Group to assist theuniversities with decisions on what IP to commercialise and how best to achieveit. It also makes provision for the Group to provide funding once the Proof ofConcept grant is complete. Under framework agreements entered into with theuniversities of Edinburgh and Glasgow, the Group stated its intent to invest £5million over a period of up to five years at each of the universities. In March2006, PoC was extended to include the University of Strathclyde. In October2006, the Group wrote to the University of Glasgow terminating its agreementwith that university. PoC supports the creation of technology companies, building on the achievementsof the SES. Funding has been welcomed by both Scottish Enterprise and theScottish Executive. Alpha EIS Fund ("Alpha")Alpha is a £2.5 million fund, established by the Group in January 2006 as thedelivery vehicle for SES and PoC. Prior to this date, SES was delivered by way of the SMART Fund. Alpha is expected to make investments in 10 to 15 licensing or spin-out opportunities that arise out of the relationships that the Grouphas with the six universities and two innovation centres mentioned in thisannouncement. Investors in the fund are the Group, clients of the Group, UberiorInvestments plc (a subsidiary of the Bank of Scotland), the National Endowmentfor Science, Technology and the Arts (often referred to as NESTA) and ScottishEnterprise (through SCF). As at 26 March 2007, Alpha has made three investments. The Group is currently indiscussions with universities regarding a number of further investments. Strathclyde Innovation Fund ("SIF")The Group has agreed detailed terms with the University of Strathclyde wherebyit is proposed that it will establish, manage and invest in a fund dedicated tocommercialising intellectual property emanating from the University ofStrathclyde. Investment will be way of equity positions in spin-out companies and royaltysharing where intellectual property is licensed to an industrial partner.Investors in SIF are expected to include the University of Strathclyde and itsalumni, the Bank of Scotland, the Group, and other institutional investors. Afirst closing of the fund is scheduled for September 2007. The fund will have ananticipated maximum value of £12 million and will operate for an eight-yearperiod, extendable to ten years with the agreement of all parties. Under the terms of the partnership agreement, the Group (being the fund manager)will pay 25 per cent. of its performance bonus to the University of Strathclyde.In addition, SIF will make a payment direct to the University of Strathclyde foruse by the department which sponsors a successful investment application. Scottish Enterprise 1. Scottish Co-investment Fund ("SCF") The SCF is a £45 million investment fund managed by Scottish Enterprise. The remit of the fund is to invest equity of between £50,000 and £500,000 in company finance deals of up to £2 million. Investment is delivered by matching the funds provided by partners such as the Group. An important part of the SCF concept is that the partner (rather than the public sector) makes the investment decision. Under its agreement with Scottish Enterprise, the Group provides a portfolio monitoring service to Scottish Enterprise. The Group was one of the first partners announced under the scheme which started operating in April 2003. In 2006, the Group received a further allocation in respect of its Alpha EIS Fund. 2. Scottish Venture Fund ("SVF") The SVF was launched in October 2006, and initially comprised a £20 million fund for growth companies. The fund is delivered via partnering arrangements with the private sector and makes provision for participating in investments of between £2 million and £5 million. In January 2007, the Group was announced as one of the first fund partners. PORTFOLIO The portfolio of investments currently managed by Braveheart includes thefollowing companies. Companies in which the Company has a direct investment areannotated thus *. Alivox Limited*Alivox is a technology company which owns the IP for "ALiS" (automatic spokenlanguage identification). This methodology identifies a language from a clip ofspeech by using speech and signal processing techniques. Potential applicationsfor the technology include multilingual call centres, emergency centres,security and international conferences. Biopta Limited*Biopta is a spin-out company from Glasgow Caledonian University, which providesspecialist contract research services with expertise in human tissue in vitropharmacology. The company is also developing instruments to analyse and assessdrug tissue-interactions. The Capital Pub Company plc* and The Capital Pub Company 2 plc*The Capital Pub Company ("CPC") was formed in 2000, with the vision of buildingan estate of traditional(rather than themed) pubs. At the date of this document,CPC manages 20 pubs, of which 17 are freehold. Having raised the maximum sumavailable under EIS, the founders launched a second EIS qualifying company, TheCapital Pub Company 2 ("CPC2"), in January 2004. As at 26 March 2007, CPC2 ownedten freehold pubs. Cascade Technologies Limited*Cascade Technologies uses quantum cascade laser technology to provide productsthat create instant DNA type fingerprints of gases, enabling their presence andquantity to be detected. The technology platform utilises lasers and detectorsto sense changing light intensity as the laser light passes through gases.Applications of the technology include security, military, oil and gas,automotive, aerospace, medical diagnostics, laboratory instrumentation, andenvironmental monitoring. Cascade Technologies is a spin-out from the Universityof Strathclyde. The Clapham House Group plcFormed by two previous executive directors of Pizza Express, The Clapham HouseGroup is now quoted on AIM. It buys and expands restaurant chains located withinthe M25 area. Brands include the Gourmet Burger Kitchen, The Real Greek and TheBombay Bicycle Club. David Page, Chairman, won "Entrepreneur of the Year" at the2007 Quoted Company Awards. Design LED Products Limited*Design LED Products has developed 'leaky' light guide technology which providesan inexpensive method of producing illuminated signs and displays incorporatingcolour, movement and animation. Design LED Products was the Group's sixthcompany funded by SES, and the second from Hillington Innovation Centre. Dimensional Imaging Limited*Dimensional Imaging is a double spin-out from the universities of Edinburgh andGlasgow and was the first company to be supported by SES. The company provides arange of 3D surface image capture systems which capture high-resolution 3Dsurface images of specific parts of the body. Applications include medical anddental applications such as maxillofacial surgery, plastic surgery andorthotics. Eastern Choice Ingredients LimitedEastern Choice Ingredients is based in Wales and provides speciality ingredientssuch as soy, black bean and oyster sauces to the food industry. The company isfully certified to British Retail Consortium Higher Level approval. Edinburgh Robotics Limited*Edinburgh Robotics is a spin-out from the University of Edinburgh's School ofInformatics. It is designing a comprehensive software development platform formobile robotics. Eleksen Group plc*In 2006, Eleksen Group reversed into Bora Communications plc, an AIM quotedcompany. It has developed touch sensitive interactive textiles for electronicsinterface design. The company's core technology, ElekTex(R), is anelectro-conductive fabric touch pad optimised for the creation of flexible,durable and rugged fabric touch screen interfaces. ElekTex(R) is used inapplications ranging from wearable electronic controls for consumer electronics("CE") to lightweight, low-power touch interfaces for CE accessories. Infinite Data Storage Group plc*Infinite Data Storage Group is based in Dunfermline and is an engineeringcompany that designs portable data storage devices to allow people to access,manage, share and preserve their music, photographs, video and data. Inxstor Limited*Inxstor was formed to exploit intellectual property in the area of 'placeshifting'. Place shifting can be seen as a location-based extension totime-shifting of digital video content. A demonstration of the concept waslaunched at the CES trade show in Las Vegas in January 2007. MicroEmissive Displays Group plc*MicroEmissive Displays Group is a developer of polymer organic light emittingdiode based microdisplays. These displays are believed to be more energyefficient than the displays currently in the market. MicroEmissive DisplaysGroup is quoted on AIM. MicroStencil Limited*MicroStencil was incorporated in 2003 and is a spin-out from Heriot-WattUniversity. It has developed a patented fabrication process which allows themanufacture of superior electroformed products. The core business is to providecost-effective, high performance screen printing stencils. Mixipix Limited*Mixipix is in the business of delivering animated content to mobile phones. Itis a new breed of media company for the mobile industry, encompassing the rolesof software developer, distribution partner and content provider. NiTech Solutions Limited*NiTech Solutions design continuous production solutions for the process andchemical industries offering environmentally friendly, lower cost and higherperformance solutions to traditional batch processing. A biofuel researchprogramme is ongoing. Optos plc*Optos is a medical devices company that enables retinal examinations to be mademore cheaply, effectively and safely. Optos was the most recent company in theGroup's portfolio to be listed on the London Stock Exchange. The IPO took placein February 2006. PSI Electronics Limited*PSI Electronics aims to deliver an intelligent fault locator system that detectsbreaks and transient faults in buried and inaccessible electric and fibre-opticcables and cable networks. The company is a spin-out from the University ofStrathclyde. Pufferfish Limited*Pufferfish is a spin-out from the University of Edinburgh and was the lastcompany to be financed via the SMART Fund. Pufferfish is developing productsbased on inflatable spherical display systems onto which images may beprojected. Quantum Filament Technologies Limited*Quantum Filament Technologies is a spin-out from the universities of Dundee andSurrey and is developing flat screen display technology based on field emissiondisplays. It is anticipated that this will challenge existing liquid crystaldisplays, plasma display panels and cathode ray tube technologies. Spiral Gateway Limited*Spiral Gateway is a fabless semiconductor chip vendor formed in 2004 as aspin-out from the University of Edinburgh. The company holds exclusive rights toa novel processor architecture, which offers the potential for a low powersolution for the development of digital circuits in a variety of applications. Tayside Flow Technologies Limited*Tayside Flow Technologies is a medical devices company focused on the research,development and commercialisation of cardiovascular devices derived from adiscovery and understanding of the haemodynamic properties of blood. The companywas a spin-out from Tayside University Hospitals Trust. Virtual Well Engineer Limited*Virtual Well Engineer is developing software for use by oil and gas wellengineers to plan, design and optimise well output. Wolfson Microelectronics plcWolfson Microelectronics provides engineering solutions in the digital audiosector of the consumer electronics market. A spin-out from University ofEdinburgh, the Group's clients first invested in Wolfson Microelectronics in1999. In October 2003, the company completed an IPO on the LSE with an initialmarket capitalisation of approximately £260 million. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Braveheart Investments