Defence Holdings,Defence Holdings PLC (LSE:ALRT), the London-listed defence technology company, rose 13% to 0.85p in morning trading on Wednesday after outlining its strategy for a £2 million investment in a new UK defence fund.
The early rise follows a period of significant volatility for Defence Holdings, whose shares have traded between 0.47p and 4.10p over the past year.
The company’s chief executive, Andrew Roughan, said the investment activates the 'investment pillar' of its five-part strategy, which also covers acceleration, products, commercial channels and technology.
The Defence Fund investment is fully funded from existing resources and is intended to give Defence Holdings exposure to a broader portfolio of early-stage defence companies while sharing investment risk with other professional investors.
The company said the fund structure allows it to participate in larger investment opportunities without concentrating its own balance sheet on individual early-stage businesses.
Defence Holdings also said the investment would not require additional equity funding for working capital, addressing concerns around the use of its capital.
The company is developing digital technologies for defence and national security markets, with its strategy focused on artificial intelligence, autonomous systems and secure communications.
The fund will operate through a separate structure managed by an independent Financial Conduct Authority-authorised alternative investment fund manager, with Defence Holdings retaining an economic interest in its underlying investments.
The company will not pay performance fees on its own £2 million cornerstone investment, while its founding principals will receive performance-related remuneration only on successful investments funded by outside capital.
Roughan said the company’s strategy was focused on building a sovereign defence technology business over the next three to five years, combining profitable contracts with investments in high-potential companies.
Defence Holdings has also secured its first revenue-generating contract with the Ministry of Defence and launched Meridian, its defence technology accelerator programme.
