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Tekcapital PLC: THE INVESTMENT CASE

Tekcapital providing investors with plenty of food for thought

The firm has established connections with more than 4,000 universities in 160 countries enabling it to capture all of the intellectual property available
Tekcapital providing investors with plenty of food for thought
INVESTMENT OVERVIEW: TEK The Big Picture
The company has switched its focus this year and is now acquiring (at pace) new technologies

Tekcapital PLC (LON:TEK) offers investors a chance to invest in some of the world’s most pioneering early-stage technology.

It has been acquiring tech for its own portfolio and has bought a slew of intellectual properties (53 to date), plus it has developed one technology of its own

IP route to healthier eating

One example of this is its Crackle-baked process, which can make baked food taste like fried but reduces the fat content by 60%.

This process, ideal for chicken nuggets and battered fish, “is a very compelling technology and very timely”, according to Gross, with more than 750mln people in the world suffering from obesity.

“We have reached out to a number of major food processors, and the general response has been very positive,” he added, noting that he expects a large company to look to license the technology in the near future.

In similar vein, in March last year the company acquired the exclusive licence to a patent application for the measurement of glucose in saliva, which could replace the need for invasive blood tests repeatedly taken by diabetics.

If not, try this: in June the company acquired a US patent for a production technique that reduces the amount of salt in food and avoids the need for sodium salt substitutes like calcium, potassium or magnesium salts.

The patent could enable the company to commercialise a replacement for table-top salt and salt in crisps, popcorn, cereals and spice mixes.

Test quantities of µSalt, as it has been dubbed, were manufactured in a facility regulated by the US Food and Drug Administration before being supplied to several organisations for independent testing.

But it’s not all products aimed at healthier eating.

University challenged

The last acquisition was a piece of gesture recognition software from the University of Central Florida that can track and interpret inputs such as handwriting and drawings on tablets and desktops.

And that is what Tekcapital does, uses its knowledge of what IP is lurking in the databases of universities around the world to find new products for itself or its clients.

It has developed a search engine to scour the universities, select appropriate results and share them with the client.

Put simply, the firm has established connections with more than 4,000 universities in 160 countries enabling it to capture all of the intellectual property available for licensing from these institutions.

This gives the firm a unique advantage, and as Gross said: “There’s strength in numbers”.

Tekcapital’s experience and position in the market also make it very difficult for any potential competitors.

Belluscura the star ...

Clearly, the company’s model offers scope for the company to cash in on its assets via spin-offs, and it has started marching down this route with a new subsidiary that has licensing deals for three products made by med-tech giant Stryker.

The new Tek business is called Belluscura and now holds the rights to Slyde, an evacuation sled; Passport, a cutting device used in keyhole surgery; Snap II, which monitors consciousness during general anaesthesia; and Wire Caddy, a proprietary wire management system used in operating theatres.

In February 2017, it signed a co-exclusive licence and development agreement with Separation Design Group, a leading research laboratory in the field of oxygen concentrators, to develop a portable oxygen concentrator.

Successful development of a product will see Belluscura targeting the massive market for treatment of chronic obstructive pulmonary disease.

Belluscura will look to bring in further devices to the portfolio and is exploring the potential of a listing on AIM separate to TekCapital.

... as net asset value soars

The growing value of Belluscura saw the value of assets soar in its latest half year.

TekCapital has a 48% stake in Belluscura, which raised US$1.7mln in May and on a read through from increased its value by US$2.94mln to US$3.68mln.

Sales at its university IP database also grew smartly, rising by 157% to US$635,000.

Overall, profits were US$1.55mln (US$1mln loss) and net asset value jumped to 19 US cents from 6 US cents.

Clifford Gross, chairman, said the 153% increase in net assets to US$7.97mln on a year-on-year basis underlined it had been a successful half year and that its focus on university-derived IP was the right approach.

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