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Tekcapital - Initiation of Coverage

Intellectual property investor with a unique business model, creating value from university IP

AIM listed Tekcapital is an international provider of technology and intellectual property investment services. The company’s objective is to create value from investing in new, university-developed intellectual properties and to produce returns through capital appreciation.

• Unique business model within the IP industry

  Tekcapital’s approach to investing in IP is different to its competitors. Instead of being aligned to just one or a few universities it has access, via a proprietary discovery search engine, to 4,500+ universities in 160 countries around the world. This is supported by a network of over 60 scientific advisors who review and select the IP with the most commercial potential.

• Nine portfolio companies each with significant commercial potential

  The current IP investment portfolio consists of nine companies operating across a range of industries. Tekcapital is now in the process of creating value from these investments, with the monetisation strategies including prototype development, out-licensing of IP to third-parties, trade sales or IPO.

• Complementary services business provides revenue stream and access to further IP investment opportunities

  The core IP investment business is supported by an IP services offering which provides universities and companies with invention discovery reports, search tools, analytics and IP professional recruitment to help them create value from new discoveries. Revenue from services grew at a CAGR of 179% from 2013 to 2016.

• Shares trade at a modest discount to the average sector price-to-book value ratio, with significant long-term upside potential on offer

  The current valuation of Tekcapital represents a discount to the average price-to-book value ratio of the wider UK IP sector and we also see significant longer term opportunities here for investors. We initiate coverage with a Speculative Buy stance.