Tern Plc (LSE: TERN) is an AIM listed company whose principal activity is investing in unquoted software companies which specialise in the Internet of Things (IoT).
Tern Plc previously traded under the name of Silvermere Energy Plc and operated in the oil and gas sector. In August 2013, following a restructuring and reorganisation, Silvermere sold its oil and gas interests; switched its investment policy to the IT sector with a focus on telecoms, mobile & cloud; and changed its name to Tern Plc.
Tern’s strategy is to acquire positions of influence in technology companies in the Internet of Things (IoT) sector in areas such as healthcare, security, networking and data analytics.
In November 2014, Tern, in its re-constituted form, carried out its first significant equity placing when it raised £378k in gross proceeds by issuing 12.6 million new ordinary shares at a share price of 3 pence each. The number of ordinary shares in issue at that time was c. 39. 972 million which implied a market capitalisation of £1.2 million.
At the date of the most recent fundraising in November 2020, the company had c 330 million shares in issue and the subscription share price was 7.5 pence. At the time the fundraising, the Tern share price was trading at 9 pence per share.
Overview of the company’s assets
The company reported Net Assets of £19.9 million in its Interim Results as at 30th June 2020. Tern currently holds investments in the following companies:
1. Device Authority: Equity ownership of 56.8%. Invested £6.8 million including a US$3.3 million convertible loan.
Device Authority delivers innovation in IoT security. It uses a platform known as KeyScaler to protect IoT applications and secure the devices and data that use them. Traditional identity authentication models and cyber security platforms are data centre centric and are not suitable for this purpose.
The platform can be used in healthcare (Medical IoT), manufacturing/production (Industrial IoT) and the connected car (Automotive IoT).
2. FundamentalVR: Equity ownership of 26.9%. Invested £2.4 million.
FundamentalVR is a leading Virtual Reality training and data analysis technology platform which combines immersive VR with cutting-edge haptics (the sense of touch). This technology offers a new way to facilitate skills development for surgeons and is used by medical centres, medical device and pharmaceutical companies.
In October 2019, FundamentalVR secured a £4.3 million Series A fundraise which included a £0.5 million convertible loan note conversion by Tern, at a post‐money valuation of £11.3 million which implies Terns investment is valued at £3 million.
3. InVMA: Equity ownership of 50%. Invested £1.050 million including a £50k convertible loan.
InVMA delivers IoT applications and Industry 4.0 System Integrator to drive change and solve problems for clients. It uses the industry leading Thingworx industrial innovation platform and the AssetMinder asset management solution.
Under Tern’s direction, InVMA’s business model has expanded from delivering engineering design and services to supplying products with a services element which Tern believe will be value enhancing.
4. Wyld Networks: Equity ownership 100%. Invested £1.1375 million including a £1.1 million convertible loan.
Wyld Networks has developed a unique technology which creates a wireless network that connects smartphones to smartphones, as well as smartphones to IoT devices in a mesh architecture. Wyld currently has its products operating in over 300,000 smart meters.
In May 2020, Wyld Networks issued a £1.1 million secured convertible loan note (CLN) to Tern which replaced (in effect, repaid) an existing cashflow loan. It also issued an unsecured CLN of £400k to an external party to provide additional working capital.
5. Talking Medicines: Equity ownership 23.8%. Invested £860k.
Talking Medicines uses advanced artificial intelligence and machine learning techniques to provide pharmaceutical companies with real-time data intelligence.
The investment is in the form of non-participating preference shares, which pay a coupon rate of 6% per annum.
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