Strathdon completes merger, joins AIM

Strathdon Investments has followed in the footsteps of prominent industry names such as 3i and Candover by becoming the UK’s latest publicly quoted private equity group.

Strathdon Investments has completed a merger with INVESCO techMARK Enterprise Trust, an investment trust previously listed on the Official List of the London Stock Exchange. The combined entity, to be known as Strathdon Investments plc, has joined the junior Alternative Investment Market (AIM).

Hampshire-based Strathdon was established in 1997 to invest between £50,000 and £2 million in established and start-up technology companies in the UK and US. “It was always our intention to become a public vehicle,” chief executive Hugh Stewart told PrivateEquityOnline. “The question was whether to opt for a fresh flotation and have the pressure of raising and investing new money or whether to reverse into an existing portfolio. We decided that the latter would achieve the transition more steadily.”

The merger results in the combination of Strathdon’s unquoted portfolio of around 20 companies with the quoted investments made by the trust. In a joint statement, the firms said the merger would enable shareholders “to participate in the long-term returns of venture investing combined with the short-term performance and liquidity of a quoted portfolio.”

The INVESCO techMARK Enterprise Trust was launched in early 2000 and Stewart says it has built up a “broad” portfolio of investments mainly focused on the IT and healthcare sectors. Strathdon’s management team is taking on executive management of the new group, while the board comprises representatives from both sides. INVESCO Asset Management will continue to manage the quoted portfolio and provide ongoing marketing services to the group.

Stewart said the unquoted portfolio comprised around two-thirds to three-quarters of the asset base, with quoted investments making up the balance. He added that the combined net asset value of the group was around £20 million – with the two entities having previously been worth around £10 million each. 

Stewart did not go into the precise details of what he described as a “complex” transaction, but said it was structured as a share-for-share swap and that no cash consideration changed hands. He said Strathdon’s external shareholders – comprising around 40 institutions and technology entrepreneurs – gave their “unanimous approval” to the deal as they thought it was “a good time to grow the business in this way.”

Towards the end of last year, Strathdon and French secondaries specialist Arcis Group pulled out of talks to buy assets belonging to struggling Belgian venture group FLV Fund citing a fall in the value of some of the assets in the third quarter of 2003. Stewart did not rule out the possibility of Strathdon playing an ongoing role in the consolidation of European venture: “If there are situations where people want help to get better returns from their assets then we may be able to help with that,” he said.     

Strathdon was advised by SJ Berwin.