News and coverage

RisingStars Growth Fund investee, ACAL Energy Limited has today announced the successful completion of a £3.3M fundraising round. Existing investors Rising Stars Growth Fund (RSGF), CT Investment Partners LLP, NorthStar Equity Investors Ltd, Porton Capital Ltd and Synergis Technologies Ltd, invested in the round and are joined by new investments from Solvay SA and a leading Japanese corporation.

The funds will be used to take the company to the next stage of development of its ground breaking low cost fuel cell systems, based on its novel platinum-free cathode technology (FlowCath®).

Fuel cells are a highly efficient and clean energy production technology capable of replacing combustion engines in a wide variety of applications including remote and distributed power, residential cogeneration as well as automotive and mobile power applications. FlowCath® replaces expensive precious metal catalysts found in conventional fuel cells with a proprietary low cost liquid catalyst. This not only reduces the cost of the fuel cell but also provides significant durability and reliability benefits through system simplification and the elimination of the most common failure mechanisms found in standard fuel cells. The company plans to introduce a 1KW demonstration system in 2009.

Acal Energy’s Chief Executive Officer, Dr SB Cha said, “We are very fortunate in this difficult investment climate to have the backing of knowledgeable and experienced investors. FlowCath® will enable fuel cells to capture a significant share of the new energy production mosaic alongside solar, wind and other forms of clean energy generation. Our world-class development capabilities and partnerships with leading companies in Europe and Asia will enable us to deliver this technology to the market in the very near future.”

Julian Viggars, Head of Technology Investment at EV, fund manger of RSGF, said, “The RisingStars Growth Fund was the initial seed investor, making its first investment when ACAL Energy was simply a credible scientific founder with a great idea and has continued to support the company through each subsequent stage of its development. This latest round is not only a vindication of the great commercial and technical progress made by the company but also of the RSGF model”.

Gerry White, Head of the Co-Investment Fund at NorthStar Equity Investors said: “We have invested in ACAL Energy’s fuel cell technology at an early stage as we believe it has huge potential to dramatically change the face of sustainable energy across the globe. We’re delighted to be involved with this pioneering high growth technology and look forward to nurturing the business through the next phase of its growth.”

Jean-Michel Mesland, Solvay’s General Manager Research & Technology and Member of the Executive Committee said. “This investment in an innovative company allows us to take part in a technological breakthrough, which will make fuel cells more cost-efficient. As leader in innovative polymer membrane technology for fuel cells, we are committed to give strong support to the development of such devices which are needed to achieve sustainable development."

“We backed the ACAL Energy technology proposition from an early stage and have been impressed by what we believe is a highly innovative and effective solution to two key barriers facing the fuel cell sector: cost and reliability.” said Jonathan Bryers, Partner at CT Investment Partners.

A company which provides foreign exchange and international & domestic payment services to SMEs and mid corporate businesses is expanding with an investment from Enterprise Ventures (EV), via the Coalfields Enterprise Fund.

TransGlobal Payment Solutions (TPS) began trading in October 2007 and is a foreign exchange and payments firm that enables its customers to make any type of transaction, in any type of payment and in any currency through its internet based solution, PayFac.

The investment, made alongside Alliance Fund Managers (AFM), will be used to provide development and working capital to the business. The completion of the deal will also see the company relocating its Head Office and sales base from London to the North West in the near future.

TPS is the first non-bank business to provide its customers with direct access to all payment infrastructures and product offerings, from FX and domestic through to cross-border transactions.

Wayne Thomas, EV Investment Director for the deal, commented, “We have been impressed with the quality of the management team and their depth of knowledge of the sector throughout our assessment of this opportunity. The marketplace for both domestic and international payment transfers will go through some significant structural and commercial changes over the coming months and we believe that this business is well placed to take full advantage of the opportunities these changes bring”.

Darren Gowling, Investment Director at AFM added: “TPS has already achieved significant sales and developed an impressive customer base. The company is run by a highly credible and knowledgeable management team which has considerable experience in the set up and successful development of FX and domestic payment companies. We are pleased to be supporting TPS and believe the business has significant commercial potential”.

Warren Whyte, TransGlobal Payment Solutions’ Managing Director, said, “We are really excited about having AFM and EV as our investor partners. With their assistance we intend to expand the business throughout the UK and develop and enhance our service offerings to our target markets across the country. I am equally as excited about assisting businesses in the North West. In these challenging times, I believe we can very easily demonstrate to businesses just how cost effective we are in providing foreign exchange and payment solutions”.

Legal advisors involved in the transaction were Andrew O’Mahony of Brabners Chaffe Street for AFM and EV and Gareth McIntegart of DWF acted for the company. Steve Stuart of The Steve Stuart Partnership advised the company on corporate finance.

Jonathan Diggines, CEO of Enterprise Ventures (“EV”), the North of England VC and private equity house was speaking yesterday at its latest RisingStars Growth Fund portfolio seminar, held in Manchester.

He forecast that base rates were likely to fall further: the 1.5% cut to 3% last week was a violent change of strategy for the Bank of England, which had previously focused on controlling inflation. The threat of inflation has not gone away. Has the Bank been leaned on? The problem facing the UK is now not recession, which has already arrived.

Even if your money is only costing 3%, or less, people are asking “why pay for a house or any capital asset today if you fear that it will be worth less tomorrow?”

The problem now facing us is deflation.

Just as not enough was done to control the asset bubble over the past five years, there is now a serious risk that action will not be taken quickly enough to protect asset values, which are now in freefall – too little too late.

The 3% base rate means money now appears cheap. In the 1990’s recession, money was expensive – 15% base rate at its peak - but it was far more readily available, compared to now.

Diggines forecasts that in 2009:-

? UK economic data will get worse,
? UK Government revenues will plunge,
? pressure will build, once again, for action,
? just like the banks in 2008, businesses will be seeking to strengthen balance sheets through new equity fundraisings.

“If the UK economy is controlled, like a car, with three pedals, the Bank of England has released the brakes by dropping interest rates and has activated the clutch, allowing the pound to fall relative to other currencies.

The Government is now talking about stimulating growth through increasing public expenditure in capital programmes. This is too long term, it lacks focus and there must be questions about delivery. It is not the right way forward.

The UK economy will stall unless the accelerator is used – rapidly and firmly – through real, tangible tax cuts. There is a lot of talk now of various options. Cut Council Tax? Increase Tax credits? Reduce VAT? No. The cuts must apply to direct taxes – income tax and corporation tax, and must be sufficiently large to make a real difference to those who will work to pull the UK out of this hole”.

There is great pressure on the banks to lend just now. But lending – senior debt or mezzanine - can only take a business so far. People will come to see that there is a real requirement for equity finance - and tremendous opportunities will unfold from new private equity raisings, not only for larger businesses, but also for the UK’s vital SME sector.

Amidst all this, at the RisingStars Growth Fund portfolio seminar, the clear conclusion reached was that this is not the time to reduce levels of investment in new technology. There is evidence to suggest that investment by institutions in new technology has more than halved globally over the past twelve months, and could halve again in 2009.

Diggines advocates that if the UK economy is to grow and outperform its global competition, this alarming trend must be reversed.

“The dogma is that technology investments don’t make money. I say: we are now in a New World, and past performance is no guide to the future. UK growth will not come from financial engineering: the biggest gains will come from new technologies that will create and fuel demand in world markets. The UK has the skills – capital is required now to exploit them”.

Enterprise Ventures (EV), the North of England based independent private equity and venture capital provider, has completed a further investment in Chromatide Limited (the Company).

The funding package includes investment from EV via its EV RisingStars Growth Fund II alongside further funding from Alliance Fund Managers (AFM) through its MSIF Liverpool Seed Fund.

The investment will be used to continue to grow the Company’s Intellectual Property (IP) portfolio and to progress out licence partnership opportunities, enabling Chromatide’s proprietary technologies to be brought to market. The Company, which received its first round of investment from EV and AFM in mid 2007, has successfully delivered on a range of technical and commercial value-enhancing milestones.

Chromatide is a provider of innovative polymer technologies designed to improve and enhance pharmaceutical and chemical production and processes. Chromatide’s primary business is to develop and licence its IP to provide a range of technologies offering superior performance and cost savings to the pharmaceutical and chemical production industries.

Julian Viggars, EV’s Head of Technology Investment, commented, “We are delighted to provide further funding to Chromatide and to continue to support the team through the next phase of growth and development. The progress the Company has made to date suggests that it has bright prospects and we look forward to working closely in the future”.

Clare Hildred, Chief Executive Officer of Chromatide commented, “We are very pleased that EV and AFM have made this additional investment. It provides further validation of the progress that Chromatide continues to make in developing, and bringing to market, our novel polymer technologies in a range of applications important to the pharmaceutical and chemical industries”.

“The Chromatide team is using its extensive expertise to develop a range of exciting new technologies in the areas of polymer synthesis, biomolecule purification, chemical processes and instrument design”.

Michael Bakewell, Investment Manager with AFM added: “AFM is delighted to co-invest in the development of an exciting new platform technology being developed by a team which has significant credibility in the marketplace.”

EV, along with Lancaster-based consultancy Charter Solutions, held the second meeting of the Lancashire Investment Panel, an initiative devised to help growing companies access the right kind of finance and advice.

The event saw three Lancashire-based companies, Ethos Solution and Carbon & Environment Solutions, both based at Lancaster University Environment Centre, together with Longridge-based Obas UK, pitch to the panel.

Dale Allen, MD of Ethos Solution, providers of online UK and EU legislative compliance solutions, said making their presentation to the panel had proved to be a useful experience.

"We have never done anything like this before and are new to business - basically the panel praised our products but advised that we needed to concentrate on our presentational and marketing skills. It gave us some really sound advice and provided us with a huge learning experience".

Ewan Wallace, Director of Carbon & Environment Solutions, commented, "The panel was inspiring and the advice it provided was very useful. It makes you stop and think and focus on your target business and client base. It also provided reassurance that there are investors out there who are willing to back initiatives that will benefit the North West and the wider regions".

The panel comprised Charter Solutions' Trevor Bargh, EV's Richard Bamford and Gill Gardner of Oglethorpe, Sturton & Gillibrand.

Richard Bamford, EV's Executive Chairman, commented, "Small firms are facing a real challenge right now as to how to finance their businesses and the panel is able to both direct them as to where they might obtain finance and also provide valuable advice".

Trevor Bargh commented, "In these challenging times, it is even more critical that businesses focus on the external marketplace, come up with innovative ideas and look at ways to increase value rather than compromise on price. Every business depends on one thing - its customers".

The next Lancashire Investment Panel session is lined up for January when another four companies are set to make a pitch.

For further information on the event and to discuss the opportunity of presenting to the panel at a future event, please call Kate Mitchell at Charter Solutions on 01524 846847