VCs exit Flightstore via £10m AIM float

Pi Capital and Matrix Private Equity, the UK-based early-stage venture capital investors, have realised the majority of their investment in airline software company Flightstore through a listing on the Alternative Investment Market (AIM).

Pi Capital and Matrix Private Equity, who invested a combined £1.7m in Flightstore when it was launched in March 2001, have sold the majority of their combined stake through an AIM flotation.

The listing, which gave Flightstore a market capitalisation of over £10m, saw the two firms’ combined stake in the business reduced from around 20 per cent to five per cent. The institutional placing, which is based on the issue of 20m new shares, was ‘heavily oversubscribed’ according to David Giampaolo, chief executive of Pi Capital.

Of the reasons for the flotation, Giampaolo said: “It was an opportunity to effect a realisation for existing investors who had taken all the risk and been greeted with brutal conditions in the aviation market, as well as bringing in a fresh injection of capital and a wider distribution of shareholders.” He added that the firm had the ability to grow by acquisition and could now use its shares as currency.

Flightstore’s proprietary software, which operates on seat-back television systems and is installed and maintained by the airlines, provides an in-flight intranet that allows passengers to purchase goods and services with organisations on the ground. The firm currently has contracts with six airlines and says it is in negotiations with another unnamed US airline with 35 aircraft.

Giampaolo said the firm had survived tough market conditions through ‘a mixture of tenacity and cutbacks’. “A large number of potential customers have not said no, they have said not now. Very few expressed no interest whatsoever.” He added that the aviation sector now looked in a better shape than for the last two years and that Flightstore was hopeful of recruiting more airlines as customers as well as more strategic partners.

Matrix Private Equity director Ashley Broomberg said the level of institutional demand for Flightstore stock was ‘very encouraging for technology companies and venture investors, and signals the directional change in sentiment in the technology sector’. Giampaolo added that he had seen ‘a profound uplift in activity and confidence in the last three to four months’.

Pi Capital is a network of entrepreneurs that invests between £1m and £3m per round in fundraisings of up to £5m. Matrix Private Equity manages a VCT and an EIS fund focused on the application of new technology.