Tern PLC (AIM:TERN) shares dropped after the investment company, which specialises in Internet of Things technology businesses, revealed a 55% decline in the fair value of its portfolio company, InVMA Limited, which trades as Konektio, following a £0.3mln equity fundraise.
Tern said it has invested £0.1mln in the raise, with the remainder of funds provided by Konektio's other institutional investors Mercia and Foresight. Tern has also converted £0.5mln of convertible loan notes in Konektio.
Prior to the fundraise, Tern had a holding of 36.8% in Konektio and as of 30 June 2022, the date of Tern's last published book valuation, this holding had an unaudited book valuation of £2.2mln.
Post the fundraise, Tern's holding in Konektio has increased to 39.9% (before any dilution on exercise of any Konektio employee share options) but Tern's holding now has an unaudited book valuation at the fundraise price, of £1.0mln.
In a statement, Al Sisto, CEO of Tern commented: "Whilst I am encouraged by the support of our co-investors in working to keep AssetMinder at the forefront of its markets through this modest funding round, I am disappointed to have to report a 55% decline in the fair value of our investment in Konektio. In our view, this fails to reflect the strategic progress that has been made within the business and which we expect to continue over coming months."
In early trading, Tern shares were down 15% at 4.25p.