Investment in portfolio company

3 August 2011

Imperial Innovations Group plc

Imperial Innovations leads £40m funding round for Nexeon

Imperial Innovations Group plc (AIM: IVO, 'Innovations', or 'the Group'), the UK's leading technology commercialisation and investment company, has led a £40m investment in Nexeon, a battery materials and licensing company which is developing silicon anodes for the next generation of lithium-ion (Li-ion) batteries.

Innovations invested £15.0m with existing Nexeon shareholder Invesco Perpetual also participating. Following this investment, Innovations will hold a 40% (33.5% fully diluted) stake in Nexeon. To date, Nexeon has raised £55m over four funding rounds since formation in 2005.

Nexeon's unique and patented silicon anode technology increases a battery's energy density, creating longer lasting batteries for the same size of battery or smaller batteries for the same performance. In December 2010, Nexeon announced it had developed Li-ion cells containing its silicon materials that had the world's highest capacity for their size.

Currently, Nexeon has the capability to produce 2,500 kg pa at its Abingdon facility. The new funding will be used to scale-up the production of Nexeon's silicon anode materials to commercial levels and to provide application development and support to customers. The new manufacturing facility is expected to be on stream in 2013. Nexeon has signed Material Evaluation Agreements with a number of leading battery manufacturers.

Li-ion batteries are widely used in consumer electronic applications such as laptops, mobile phones, and tablet computers, and in electric and hybrid vehicles. The global market for Li-ion batteries is currently $10bn, but estimates have suggested that will increase to between $40bn and $60bn over the next decade.

Russ Cummings, Innovations' Chief Investment Officer, led the fundraising and is on Nexeon's board, whilst Paul Atherton, a non-executive director of Innovations, is Chairman of Nexeon.

Susan Searle, Imperial Innovations' CEO, said:

"This investment is a substantial endorsement of Nexeon's technology and management team. It is in line with our strategy stated at our recent equity raise to accelerate the development of our advanced portfolio companies, as well as to stay invested in some of them for longer. 

"This new funding round will enable Nexeon to scale up the business more quickly and support its manufacturing facility in Abingdon - already one of the most advanced worldwide."

Scott Brown,Chief Executive Officer of Nexeon, said:

"We are naturally delighted at the support shown by our investors who see the potential of our silicon anode technology and the excellent progress being made by our team.

"With the strong financial backing of Innovations and Invesco Perpetual, we are well placed and very much on track to meet our customers' needs and to achieve our commercial ambitions."

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Notes to editors

Innovations creates, builds and invests in pioneering technologies addressing global problems in healthcare, energy, engineering and the environment. It combines deep understanding of science and technology with commercial acumen and strong investment expertise. Innovations supports scientist-entrepreneurs in the commercialisation of their ideas by:

·; leading the formation of new companies and providing facilities in the early stages;

·; providing significant investment and encouraging co-investment to accelerate the transition from R&D to products;

·; providing operational expertise; and

·; helping to recruit high-calibre industry figures and experienced entrepreneurs as executive management and Board members.

In December 2010 Innovations raised £140m to accelerate the making of, and increase the size of, investments in companies established under its existing intellectual property pipeline agreement with Imperial College London. The Group also intends to invest in companies founded by or based on technology from the University of Oxford, the University of Cambridge and University College London.

Innovations has already achieved significant success with its early investments; for example its £1.5m investment in obesity drug developer Thiakis could return up to £22m, following its sale for £100m in 2008, while the sale of Respivert, a small molecule drug discovery company, resulted in Innovations realising £9.5m, a 4.7x return on investment.

In the year to 31 July 2010, Innovations invested £14.0m in 20 ventures, helping to launch three new companies. With a technology portfolio of more than 80 companies, Innovations' most advanced assets include:

·; Circassia: Innovative vaccines for the treatment of a wide range of allergies

·; Nexeon: Advanced materials that extend the cycle life and significantly increase capacity of rechargeable batteries

·; Veryan: Stents inspired by the human vascular system

·; PsiOxus Therapeutics: Developing a pipeline of small molecule therapeutics for the treatment of wasting diseases and cancer.

·; Polytherics: Biotechnology company that applies precision chemistry to develop protein and peptide-based drugs

·; Cellmedica: Cell therapy company working on new techniques to cure human diseases based on cellular immunotherapy

·; Evo Electric: Develops and manufactures advanced electric machines, hybrid drive trains and generator sets for a wide range of transportation and mobile power applications

Nexeon

Nexeon is a battery materials and licensing company developing silicon anodes for the next generation of lithium-ion battery.

Nexeon's unique silicon anode material unlocks the potential of silicon to deliver increased capacity without compromising lithium-ion battery cycle life, providing lighter batteries with more power and longer lifetime between charges.

The company is based on the research of Emeritus Professor Mino Green at the Department of Electrical Engineering at Imperial College London.

Nexeon has filed a sequence of patents including high-aspect ratio silicon materials and the use of such materials in lithium-ion batteries. It has developed a number of proprietary processes and equipment for producing the material and making electrodes. Benefits of Nexeon's technology include increased cell capacity, lower cost to manufacture, minimal disruption to the existing manufacturing process and improved safety margins.

Nexeon operates a fully automated and instrumented pilot plant, demonstrating a clear understanding of costs and the path to full-scale manufacturing.