Interactive Investor

Technology investors worth following

15th December 2014 16:57

Lee Wild from interactive investor

Billions of pounds a year is pumped into developing technology at British universities. And where once much of the so-called intellectual property (IP) created by UK colleges ended up leaking to major corporations overseas, listed companies with an ability to help take ideas through to commercialisation have thrived.

It has been an industry dominated by two big-hitters. IP Group hoovered up a lot of the top universities years ago, and Imperial Innovations was in the game early, too, and has relationships with Oxford and Cambridge. Both have more expertise and cash than the college's own Tech Transfer Offices (TTOs) and can afford highly qualified staff.

But now there's a new kid on the block both with the money and track record to make an impact.

Mercia Technologies will fund and commercialise high-growth technology businesses mostly in the Midlands and the North of the UK. It has collaborative relationships with nine universities, including Birmingham and Warwick, and research centres in the UK, which means access to any number of spinout and early stage investment opportunities. The company has already spent £16 million and has a direct investment in 11 operating companies and a portfolio of 38 businesses.

It has just raised £66 million after costs through an institutional placing, valuing the business at £106 million. Listing on AIM on Thursday 18 December will provide access to further capital when required, help attract experienced staff, including a new chief investment officer, and expand relationships with universities.

"We provide a platform to accelerate the development of high growth technology companies in selected sectors with the goal of exiting the investments over time, generating attractive returns and realising value,” explains chief executive Mark Payton.

It certainly piqued the interest of star fund manager Neil Woodford whose Woodford Investment Management has bought a 20% stake. His former employer Invesco will own 29.5% of the company.

Why not London and the South East?

Well, Mercia points to analysis which identifies a lack of capital for businesses in the regions, where there are approximately 19,000 small and medium enterprises. The number of high growth small businesses there grew by 18% between 2011 and 2013.

MFM, Mercia's third party fund management company, will buy early stage companies ranging from university spinouts to more developed businesses, not exceeding £10 million in annual revenue.

Among the companies it hopes will be the stars of tomorrow are Science Warehouse, a spinout from the University of Leeds which has developed a cloud-based procurement, catalogue and spend analysis platform. It gives the customer control of the purchasing cycle from requisition through to payment helping to deliver cost savings and to manage spend.

Warwick Audio is a University of Warwick spinout specialising in the development of flat, flexible loudspeakers. They're cheaper to make, are lightweight and use 10% less power than conventional speakers.

And University of Birmingham spinout, Smart Antenna has developed technology which provides an efficient and low cost antenna solution to the mobile PC, tablet and portable device market. About 2 billion handsets are made every year.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Related Categories