NetScientific PLC (AIM:NSCI), the AIM-listed venture capital and corporate finance firm, has announced significant strategic moves with Martlet Capital, including appointing its subsidiary, EMV Capital, as the investment manager of Martlet's £23.3 million investment portfolio.
EMV has also acquired Martlet's operational venture capital business in a separate transaction, positioning itself for increased influence in the Cambridge tech cluster.
The deals were finalised after EMV identified an opportunity to leverage its management expertise to potentially accelerate returns for Martlet's shareholders from its 53 investments in the deep tech and life sciences sectors.
NetScientific and EMV have been invested in Martlet since its early funding rounds in 2021 and hold a combined direct stake of 1.38% with additional advisory rights.
Under the terms of the investment management agreement, which spans a minimum of four years, EMV will earn management fees in the mid-to-high-six figures annually, along with carried interest on the portfolio's growth.
The operational aspects of Martlet’s business, now housed under the newly formed Martlet Capital Management within the NetScientific group, do not include the Martlet Portfolio but encompass all ongoing operations and staff.
In connection with the acquisition, EMV Capital is poised to introduce two new investment funds—Martlet Capital Fund II and Martlet Growth Fund. Both aim to build upon Martlet's established investment approach and explore emerging follow-on investment opportunities.
Further details about the new funds will be disclosed as plans progress.
This strategic expansion notably boosts NetScientific's funds under management by approximately 89% compared to the figures reported in mid-2023.
The acquisition of Martlet's operational business by EMV includes an initial cash consideration of £2.00, plus deferred cash payments. These deferred payments are linked to future earnings, comprising 10% of net carried interest from public institutional investments in new funds, and 20% from investments by Martlet Capital Fund II and Martlet Growth Fund, all within two years of the deal.
CEO Dr Ilian Iliev said: "This non-dilutive transaction represents an important milestone for the NetScientific group, aligned with our objectives to become a leading deep tech and life sciences venture capital investor in the UK and Europe."