VSA Morning Technology Comment, 24/05/21
Frontier IP Group (LON:FIPP)
Portfolio Company Pulsiv announces new investment and CEO appointment
Frontier IP Group, has today announced that portfolio company Pulsiv Solar ("Pulsiv" or the "Company") completed a second tranche of its equity funding round, raising a further £620,000, to bring the total of new money raised to £1.5 million. In addition, as previously announced, £500,000 of loans plus accrued interest have been converted as part of the UK government’s Future Fund scheme and the Group has converted an additional £165,000 of existing debt plus accrued interest into equity.
The Company name is to change from Pulsiv Solar to Pulsiv to reflect the much wider range of potential applications for the technology.
Pulsiv is a spin out from the University of Plymouth and its mission is to “Make the most efficient use of electricity wherever it is converted”. Pulsiv’s technology uses fundamentally new power conversion technologies which address a broad range of applications improving the efficiency with which alternating current, AC, is converted into direct current, DC, and vice versa.
The technology targets energy efficiency and the need for smarter and more energy-efficient products. Consumers also expect battery powered equipment to last longer on a single charge, faster battery charging and domestic appliances that cost less to run. Pulsiv’s power conversion technology targets achieving this in smaller, lighter and more cost-effective designs.
The technology can be used in any mains-powered product, battery chargers, lighting applications, electric vehicles, portable power tools and DC motors. All are significant end global markets. The Company is already working with Bosch on a new microinverter to generate maximum power from photovoltaic solar cells in a more economical way.
Pulsiv now has funding, proven technology, industry involvement and international market opportunity. The Company requires driving forward, growth to accelerate and its valuation to increase. The Pulsiv team is being strengthened.
A new CEO has been announced, Darrel Kingham, an ex-General Manager General Manager for Aixtron, a German-based provider of deposition equipment to semiconductor manufacturers. Prior to Aixtron, Darrel held a variety of senior roles for semiconductor IP group Arm for more than 10 years, including General Manager of Arm China, VP Licensing Operations and VP European sales.
Dr Zaki Ahmed, who developed Pulsiv’s technology, has left his post at the University of Plymouth, where he was Associate Professor of Information Technology, to work full time for the Company. Tim Moore, Executive Vice President of Shark Robotics, as a non-executive director to its Board of Directors.
Frontier IP Group provides commercialisation services in return for equity in private technology companies. Of the 19 portfolio companies that Frontier IP has stakes in, a number are at a point of acceleration in commercial development, paving the way for a significant step up in valuation or a potential exit – they are at “inflexion point”. Pulsiv is one such example. This given breadth of market opportunity and have already attracted industry interest from Bosch in its technology IP, could provide significant future valuation upside. At December 2020 end, and prior to recent Pulsiv fundraising, Frontier IP held an 18.9% stake in Pulsiv.
Another example is Exscientia, which has developed an artificial intelligence-based drug discovery technology company. On April 28th, 2021, Exscientia completed a US$225 million Series D funding round led by SoftBank’s Vision Fund 2i. This followed a $100m Series C funding round completed in March 2021 and led by Blackrock.
The Group’s equity holdings are in four high growth technology clusters comprising: artificial intelligence, robotics and big and sparse data; pathogens and cell imaging; food and agritech; and engineered particles and materials. We believe that Frontier IP represents an excellent opportunity for investors to gain exposure to early-stage technology companies, based on leading edge IP, which meets the needs and demands of international markets.
Although Frontier IP has yet to have an exit to crystallise cash value, and the timing and value of potential exits is hard to assess, given the number of companies in the Frontier IP portfolio now at inflection points, such as Pulsiv and Exscientia, this is becoming a real possibly.
As a result, we believe the shares offer distinct valuation upside potential. Buy
#Indicates VSA house stock.
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Phil Smith, Equity Analyst, Technology | T: +44 (0)20 3617 5187 | E: psmith@vsacapital.com
VSA Capital Research | T: +44 (0)20 3005 5000 | E: research@vsacapital.com
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