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Tekcapital PLC

Tekcapital expects IP strategy to lead to improved returns

Snapshot

Tekcapital expects “the quickening pace of innovation” in the portfolio companies to lead to higher service revenues in the future

Tekcapital

Quick facts: Tekcapital PLC

Price: £0.07

Market: LSE
Market Cap: £4.47 m
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  • Equity raise of US$1.1mln to fund development of technologies

  • Portfolio companies include AR glasses specialist Lucyd and medtech group Bellascura,

  • In May, Lucyd launched Loud 2.0, a new range of its Bluetooth-enabled glasses

  • Tekcapital also helps fund and evaluate new IP for companies

 

What Tekcapital does:

Tekcapital PLC (LON:TEK) is an intellectual property (IP) investment firm that helps commercialise innovations developed in universities around the world. It spins out the IP into separate companies and finds management to help capitalise on and commercialise the IP.

In July, it signed a strategic alliance with the Technological University of Queretaro in Mexico (UTEQ).

UTEQ has created the Creativity and Innovation Center (CIC) 4.0 as a platform to promote the commercialisation of university technology.

TekCapital also has a services business that helps companies find, evaluate, and license technologies.

On the investment side, its current portfolio boasts firms that are at technology’s cutting edge.

Portfolio companies:

The portfolio includes 97.5%-owned Salarius, which owns a patented manufacturing process for producing low-sodium salt, a market expected to be worth US$1.76bn by 2025.

It also includes wholly-owned Lucyd Ltd, which is developing smartglasses, a sector that is estimated to reach US$36.4bn by 2023.

Tekcapital has a 33% stake in Bellascura, which is developing a CURV portable oxygen concentrator (POC). The POC market is projected to reach US$1.7bbn by 2022.

Wholly-owned Guidant was established by Tekcapital to commercialise new technology to improve the safety and efficiency of autonomous driving. It has a exclusively licensed US patent that has the potential to enable the development of software apps for controlling autonomous vehicles such as cars, trucks and drones using artificial intelligence.

Other portfolio companies include touch-screen technology developer, e-Soma Ltd, and food preparation firm, Smart Food Tek.

Inflection points:

  • In June, Bellascura raised £725,000 of additional funding and was on track to receive US regulatory clearance this year for its X-PLOR portable oxygen concentrator
  • Guident exclusively licensed an “important” patent application from Michigan State University covering a technology which allows driverless cars to ‘talk’ to one another
  • Tekcapital said Salarius had has secured and delivered a new order for its low-sodium salt substitute MicroSalt to a Mexican seafood company to be used in their dried shrimp snacks, adding that the company was in discussions about “numerous” other orders
  • In May, Lucyd launched Loud 2.0, a new range of its Bluetooth-enabled glasses

Blue Sky:

Tekcapital chairman Dr Clifford Gross has said the firm’s strategy would “likely to result in further increases in returns on invested capital, and profitability in the future”.

He added: "Because of the quickening pace of innovation, an increasing number of companies are making ever faster and more disruptive use of innovative ideas sourced exogenously. We believe this should result in increased service revenues in the future and enhancement of the combined value of our portfolio companies."

In a note to clients, finnCapp investors said: “The group provides access to intellectual property sourced from a global network of universities, providing unique technology investment opportunities to its customers and its own portfolio companies."

finnCap has a price target of 32p on the stock based on its valuation.

With the shares trading around 11.5p as of 26 June 2019, Tekcapital carries a market cap of £5.7mln.

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