Tekcapital - Placing provides funds for further growth. Conviction Buy

Tekcapital  - Update 

Placing funds further development and shares continue to trade at a substantial discount to NAV

Since our last update in August Tekcapital has announced interim results, a placing of $1.15 million and positive updates across certain investee companies.

- Interims show increased service revenues and rise in NAV

Numbers for the six months to 31st May 2018 showed another profitable period of trading, with total revenues of $1.28 million and a pre-tax profit of $105,996. Revenues from services were up by 29% at $0.64 million reflecting continued growth of technology transfer services, particularly in Latin America. Net assets were up by 35% over 12 months at $10.75 million, with NAV per share up by 32% at 25 cents.

- Placing raises $1.15 million to invest in portfolio company expansion

Tekcapital has raised $1.15 million by issuing 11,698,335 new shares at a price of 7.5p each. The proceeds will be used to fund investment in key activities, to further develop and progress with the commercialisation of its portfolio of IP technologies and for working capital.

Investee companies report further progress

- Autonomous vehicle technology developer Guident Ltd has appointed Harald Braun, an experienced telecoms industry executive, as Chairman. Also, medical device business Belluscura, along with research partner Separation Design Group, has filed three patent applications & received a Notice of Allowance of a fourth application in the fields of respiratory, postoperative recovery, sedation/sleep monitoring and artificial intelligence. 

- Shares trade at a large discount to NAV and the IP sector average 

- Tekcapital shares currently trade at a c.50% discount to NAV (accounting for the placing) and at a 54% discount to the wider UK IP sector average price-to-book value ratio. This, combined with additional value creation opportunities, leads us to retain our stance of Conviction Buy.