The quiet revolution going on behind the scenes at Seeing Machines Limited (LON:SEE) appears to be gaining some traction.
For the AIM-listed technology company said on Monday it has signed a term sheet with a US-based investment firm with “extensive experience in automotive technologies”.
Key to the outside interest is the firm’s driver monitoring systems (DMS), which is able to work out whether the person behind the wheel is awake and alert
The plan is for investment into a separately funded company “solely focused on commercialising Seeing Machines' technology in the automotive market”.
Seeing Machines said it would retain a “significant” equity stake in the new business.
The firm and its advisors are working with the lead investor and other potential backers to finalise the investment round.
Chief executive Ken Kroeger said: "This continued execution of our multi-sector transport strategy builds on our successful venture with Caterpillar for rugged off-road industries.
“We believe that spinning out the automotive driver monitoring business will sufficiently resource the automotive business, further develop our automotive industry relationships and maximise the return for Seeing Machines' shareholders."
Queuing around the block
Seeing Machines now has customers queuing around the block to use its DMS set-up in the first generation of semi-autonomous vehicles.
At the last count, 16 companies had hooked up with Seeing Machines, whose speciality is eye tracking and facial recognition.
The big brand companies are already in bed with a firm called Mobileye, valued at US$9bn on minimal revenues.
Its market worth is derived from the fact that it has the go-to collision avoidance technology that watches and maps the road ahead. In other words it keeps the vehicle safe and between the white lines.
The Seeing Machines technology is essentially a Mobileye-style system that looks into the cab rather than out to the road. And in new semi-autonomous vehicles Seeing Machines DMS monitors whether the driver is ready and able to take the controls at any given point in the journey.
The DMS could be deployed in the same numbers as the Mobileye device.
In Monday’s announcement the company said the launch of its first monitoring systems for a global car maker is expected in early 2018.
CEO Kroeger spoke to Proactive Investors’ Juliet Mann
One the term sheet…
This is the first step, getting the cornerstone investor on board and signing the term sheet and the commercial agreement that paves the way for the follow-on investment. So we are now socialising that term sheet with the others and most are doing their own due diligence and we hope to close it this quarter.
What it means for investors…
What we like about this is we haven’t asked any of our existing shareholders to reach into their pockets to fund this. There is no dilution. Seeing Machines will have an asset on its books arguably worth more than the parent company. It is a great outcome for shareholders.
Broker says this is the first step in process
The shares were little changed in early afternoon trade a just a smidgle under 4p, valuing the business at £42.5mln.
Lorne Daniel, of City broker finnCap, said: "With its March interim results, Seeing Machines announced it had engaged a Silicon Valley investment bank to examine options to spin off the automotive OEM business into a separate business, accessing greater pool of funds and encouraging buy-in and engagement across the huge global industry.
"Today’s news marks the first stage of this process, as it has signed a term sheet with a US investment fund with experience in automotive technology, for investment into a separately funded company focused on OEM development of the technology."
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