Braveheart Inv Regulatory News (BRH)

8 Jun 2009 07:06



8 June 2009

Braveheart Investment Group plc

('Braveheart' or 'the Group')

Acquisition of Inkopo Limited ('Inkopo')

Enhanced service offering, expansion of geographic coverage into Yorkshire, and increase in funds under management 

Braveheart (AIM: BRH), the technology commercialisation and investment management company, announces the acquisition of the entire share capital of Inkopo, a specialist investment business based in Yorkshire. The consideration comprises an initial cash payment and three tranches of Braveheart shares over the next two years, subject to a maximum value of £1.31 million. The number of shares to be issued will be based on the future performance of the business being acquired and all shares will be issued at a value of 39.2p, being a premium of 33% over the mid market share price on or about the day terms were agreed. Full details of the consideration are set out below.

Inkopo specialises in technology investing and has core businesses in the areas of, investment facilitation, portfolio management and management services. The Board of Braveheart believes a strong complementary fit exists between the two businesses in terms of management expertise, service offering, clients, relations with academic and publicly funded bodies and geographic coverage. In particular the following specifics are noted:

There are opportunities to cross-sell Braveheart's investment management activities to Inkopo's investment finance, consultancy and management services customers, and vice-versa

Inkopo's relationships with academic and public sector bodies in the North of England broadens the Group's access to potential portfolio companies

The management services that are offered by Inkopo constitute an additional area of business for the Group. This is an area in which the Group has previously expressed an interest

The enlarged Group will have offices in Perth, London and Yorkshire

The Initial Consideration comprises a cash payment of £75,000 and, subject only to their admission to trading on AIM, 511,937 ordinary shares in Braveheart. Two further tranches of consideration are payable on the first and second anniversary of completion ('Deferred Consideration'). The Deferred Consideration will be settled by the further issue of ordinary shares in Braveheart or, at Braveheart's discretion, in cash or by the issue of unsecured loan notes. The Deferred Consideration will be based on (i) Inkopo's turnover for the years ending, 31 March 2009, 31 March 2010 and 31 March 2011, and (ii) the attainment by Inkopo of certain other non-turnover based operating targets benefitting the Group. The total aggregate consideration is capped at £1.31 million irrespective of any over performance of Inkopo's targets. All Braveheart ordinary shares issued as consideration will be valued at a price of 39.2p, representing a one third premium to the average closing price of Braveheart shares on the five days prior to 15 May 2009, being the date on which heads of agreement were signed.

The ordinary shares issued as consideration will be subject to trading restrictions. None of the vendors are permitted to dispose of any Initial Consideration shares prior to the anniversary of Completion, nor in the following year without the consent of Braveheart and its nominated adviser and broker. None of the vendors are permitted to dispose of any Deferred Consideration shares for a period of two years following the date of issue without the consent of Braveheart and its nominated adviser and broker.

Inkopo was formed in 2002 as the result of the management buy-out of UniVentures, the technology transfer vehicle for Leeds Metropolitan University. The buy-out was effected by Andrew Burton, Inkopo's CEO and then CEO of UniVentures, who then expanded the company's activities to provide a corporate base for serving the needs of early stage, technology-based enterprises. In 2004, Inkopo won a contract from central government to operate one of the eight regional Early Growth Funds, named the Viking Fund, and subsequently, it's not-for-profit sister company, Viking Business Angels Club Limited.

Inkopo's business now comprises Investment Finance, Consultancy Services and Client Services (together referred to as Management Services). 'Investment Finance's' activities include the management of the Viking Fund (deal flow generation, feasibility assessment, co-investor identification, negotiation, investment structure, due diligence, legal documentation and completion services) and; the provision to the Viking Fund and its portfolio companies of interim management and non-executive directors. 'Consultancy Services' provide consultancy to Viking Fund portfolio companies as well as to third party external companies and publicly funded organisations. 'Client Services' engage in operational support service provision in areas such as IT, accounts and marketing for Viking Fund and third party companies. Inkopo's turnover for the year ending 31 March 2009 was £451,528 and its profit before tax was £1,176. As at that date it had net assets of £164,746 which principally comprise investments in unlisted companies.

Commenting, Chief Executive of Braveheart, Geoffrey Thomson, said, "This acquisition is in line with our stated growth strategy and demonstrates our ability to find and execute such transactions. Inkopo complements our existing business and we now have operating bases in Perth, London and Yorkshire. Our plans are to grow Inkopo by making additional operational and financial resources available to the incumbent management and we look forward to working closely with the team. Andrew Burton who runs the business is a well known and respected operator in our market place and I welcome him and his people to the Group."

Andrew Burton, Chief Executive of Inkopo added, "This is a logical step in the growth of Inkopo. Being part of a larger organisation gives us access to additional resources and means that we can grow the business at a faster rate than would otherwise be possible. Braveheart are respected players in our sector and we look forward to working with them." 

For further information please visit www.braveheart-ventures.co.uk and www.inkopo.com or contact:

Notes to Editors

Braveheart

Braveheart Investment Group is a technology commercialisation and investment management company based in Perth, Scotland. Since its formation in 1997 it has made the transition from start-up angel syndicate to fully listed company. Braveheart's shares listed on AIM in March 2007.

Investments are made in young, emerging, unlisted companies where there is potential for significant growth through successful commercialisation of IP and Braveheart enjoys close relationships with several universities to identify emerging technologies. Investments are predominantly technology-focused; however the Group also maintains limited exposure to more traditional businesses.

Braveheart's diverse portfolio currently comprises over 30 companies and it has completed over 80 deals in its eleven year history, including six IPOs, three trade sales and eight write-offs and has an exit IRR of 33%.

At the 2008 Ernst & Young Entrepreneur of The Year Awards (Scotland) Braveheart CEO Geoffrey Thomson was given a special award recognising his contribution and support of emerging technology businesses in Scotland over the past decade.

Inkopo

Inkopo are specialists in science- and technology-based businesses Founded in 2002, the company has seven full-time staff operating from offices in Wakefield and Harrogate. They provide consultancy, seed investment and interim services catering for pre- and post-start companies across Yorkshire and the North of England.

In 2004, Inkopo were one of the founders of the £5.0m Viking Fund, and to date have provided the Fund's investment management and operations staff. Over the last five years Viking Fund has made some 50 investments in 27 early-growth, technology companies: one is now listed on AIM; 12 have received follow-on investment from larger venture funds; one was bought back by management; and four have failed.

The Yorkshire-based Viking Club, for which Inkopo provides the secretariat, is a private group of 25 High Net Worth investors, formed to co-invest alongside Viking Fund. From 2004 to 2009, members co-invested over £5.0m, successfully levering in a further £7.0m from other business angels and venture funds.