For release on RNS: 07.00, 13 May 2024
NetScientific
plc
("NetScientific" or
the "Company")
Investment management mandate
with Martlet Capital
and acquisition of its
operational business
NetScientific plc (AIM: NSCI),
the deep tech and life sciences VC investment group, is pleased to
announce that the Company's wholly owned venture capital and
corporate finance firm, EMV Capital Limited (EMV Capital), has been appointed as
investment manager to Martlet Capital Limited (Martlet Capital) to manage on a
discretionary basis its c.£23.3 million portfolio of investments
(Martlet Portfolio). In
addition, EMV Capital has acquired the operational venture capital
business of Martlet Capital (Martlet Business), excluding the
Martlet Portfolio, (Transaction).
Background to and rationale for the
Transaction
Founded by Robert Marshall, Martlet
Capital is a seed stage investor based in Cambridge, providing
patient capital to deep tech and life sciences early-stage
companies, primarily in the Cambridge tech cluster. The Martlet
Portfolio comprises 53 investments with a fair value of c.£23.3
million as at 31 March 2024.
NetScientific and EMV Capital
invested in the initial fundraising rounds of Martlet Capital in
September and December 2021, and have a current direct stake of
1.38 per cent. (1.49 per cent. voting rights) with an additional
8.2 per cent. (8.88 per cent. voting rights) in capital under
advisory (such percentages assuming the conversion of convertible
loan notes held by NetScientific and those of capital under
advisory).
Having worked closely with Martlet
Capital since incorporation, EMV Capital recently identified the
opportunity to take on the investment management role for Martlet
Capital, using its active management strategy to accelerate and
maximise returns for the shareholders of Martlet Capital following
exits from the Martlet Portfolio. The existing Martlet Business
transfers to a new company within the NetScientific group, Martlet
Capital Management Limited (MCM), and the Martlet Portfolio remains
under the ownership of Martlet Capital.
The Transaction provides to
NetScientific and its group:
· an
additional c.£23.3 million of funds under management, an increase
of c.89 per cent. upon the £26.1 million of capital
under advisory announced by the Company for the period to 30 June
2023;
·
recurring investment management fees for a minimum
period of four years; and
·
carried interest over the Martlet
Portfolio.
In addition, the respected Martlet
brand provides EMV Capital with further exposure to the deep
network of Martlet Capital within the globally renowned Cambridge
high-tech cluster, known for its track record of generating
high-value technology businesses in the deep tech and life sciences
space. EMV Capital intends to work closely with MCM in order to
leverage the Martlet brand by means of exploring investor appetite
for the proposed launch of the following two proposed new Martlet
funds (New Funds), each to
be managed by EMV Capital if and when launched:
·
Martlet Capital Fund II (or similar) (MC2): a fund to build on the existing
investment policy of Martlet Capital
(noting it is not anticipated that Martlet Capital itself will make
material new investments); and
·
Martlet Growth Fund (or similar) (MGF): a fund intended to take up
follow-on investment opportunities emerging from the
Martlet Portfolio and others investments, which is anticipated to
be established following the
launch of MC2.
Further announcements regarding the
New Funds will be made if and when appropriate.
Investment management agreement (IMA)
EMV Capital has entered into an IMA
with Martlet Capital in respect of its appointment as discretionary
investment manager of the Martlet Portfolio. The IMA is for a
minimum term of four years, subject to customary termination
provisions for cause.
Under the IMA, EMV Capital is due to
receive from Martlet Capital annual management fees, which will be
mid-high six figures per annum over the term of the IMA, and
carried interest fees based on the increase in fair value of each
company within the Marlet Portfolio between the existing fair value
and the values received upon each exit.
EMV Capital has also committed to
provide Martlet Capital shareholders with preferential investment
terms should they wish to invest in MC2 and/or MGF, certain
co-investment rights relating to the Martlet Portfolio, and
opportunities to participate in other investments advised upon by
EMV Capital (including the portfolio companies of
NetScientific).
Business transfer agreement
Pursuant to a business transfer
agreement (BTA), MCM has
acquired as a going concern the Martlet Business, including (inter
alia) the existing team managing the Martlet Portfolio, the
goodwill, business information, IT systems, business intellectual
property, and the Martlet director services company, Martlet
Capital Directors Limited.
For the year ended 30 September
2022, the Martlet Business generated no revenues (given the nature
of the business) and a loss of approximately £0.97 million. The
gross asset value of the assets the subject of the transaction is
£0.002 million.
During the term of the IMA and
should the New Funds in due course be launched, EMV Capital expects
the annual management fees receivable thereunder to offset the
ongoing costs associated with the Martlet Business, with
anticipated costs savings also identified in connection with a
number of synergies arising from the similar operating requirements
of EMV Capital and the Martlet Business.
The consideration payable by MCM to
Martlet Capital for the Martlet Business comprises an initial cash
payment of £2.00 and deferred cash consideration as summarised
below:
·
10 per cent. of any net carried interest received
by the NetScientific group in respect of investments
made by a public institutional investor in the New
Funds within two years of completion of the BTA;
·
20 per cent. of any net carried interest received
by the NetScientific group in respect of investments
made by MC2 within two years of completion of the BTA;
and
·
20 per cent. of any net carried interest received
by the NetScientific group in respect of investments
made by MGF into companies within the Martlet
Portfolio.
Dr
Ilian Iliev, CEO of NetScientific and MD of EMV Capital,
commented:
"This non-dilutive transaction represents an important
milestone for the NetScientific group, aligned with our objectives
to become a leading deep tech and life sciences venture capital
investor in the UK and Europe. Robert and his team have created a
respected brand within the world-class Cambridge high-tech
investment cluster. This is a logical next step in the deepening
relationship between our organisations following our initial
investment in 2021.
"This important fund management mandate and acquisition of the
Martlet business significantly increases the fee income and
critical mass of our funds practice. We also gain 'work in
progress' for the potential launch of two further funds under the
Martlet brand and a supportive Martlet investor
base.
"I
thank Robert Marshall and the broader Martlet team for their
collaborative approach in executing this carefully balanced
transaction. We look forward to working together to deliver returns
for Martlet Capital shareholders and EMV Capital and to further
leverage and grow the Martlet brand."
The person responsible for arranging
the release of this announcement on behalf of the Company is Edward
Hooper, General Counsel and Executive Director of the
Company.
THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE UK VERSION OF
REGULATION (EU) NO 596/2014 WHICH IS PART OF UK LAW BY VIRTUE OF
THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. UPON THE
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION
SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE
PUBLIC DOMAIN.
-Ends-
For
more information, please contact:
NetScientific
|
|
Ilian Iliev, CEO
|
Via Belvedere
Communications
|
|
|
Panmure Gordon (UK) Limited (NOMAD and
Broker)
|
|
Emma Earl / Will Goode / Freddy
Crossley / Mark Rogers (Corporate Finance)
Rupert Dearden (Corporate
Broking)
|
+44 (0)20 7886 2500
|
|
|
Belvedere Communications
John West / Llewellyn
Angus
|
+44 (0)20 7653 8702
|
About NetScientific
NetScientific plc (AIM: NSCI) is a
deep tech and life sciences VC investment group with an
international portfolio of innovative companies.
NetScientific identifies, invests
in, and builds high growth companies in the UK and internationally.
The company adds value through the proactive management of its
portfolio, progressing to key value inflection points, and
delivering investment returns through partial or full liquidity
events.
NetScientific differentiates itself
by employing a capital-efficient investment approach, making
judicial use of its balance sheet and syndicating investments
through its wholly owned VC subsidiary, EMV Capital. The group
secures a mixture of direct equity stakes and carried interest
stakes in its portfolio of companies, creating a lean structure
that can support a large portfolio.
NetScientific is headquartered in
London, United Kingdom, and is admitted to trading on AIM, a market
operated by the London Stock Exchange.
www.netscientific.net
About Martlet Capital
Martlet Capital is an early-stage
investor based in Cambridge, providing patient capital to deep tech
and life sciences B2B startups with high growth
potential.
Martlet Capital (and its predecessor
entity) has invested in more than 65 start-ups since its launch in
2011. In 2021, Martlet successfully raised additional capital to
scale its investment activity.
The team is comprised of experienced
investors and entrepreneurs. In addition to capital, Martlet offers
support, experience and a network of contacts.
They have achieved several exits
from their portfolio, from trade sales to global technology
companies and IPOs. Notable exits include Abcam, Cambridge CMOS
Sensors, Arachnys, Audio Analytic.
https://martletcap.com/