QinetiQ today announces the creation of a new technology venture fund (QinetiQ Ventures LP) to accelerate the development and realisation of seven of its venture investments. The fund has been launched by QinetiQ and Coller Capital, a leading global investor in corporate venture assets.
QinetiQ has established the new fund to drive faster growth from its venture portfolio by creating an independent team with exclusive management focus and long term capital commitment. The creation of the fund is expected to enhance value creation for the QinetiQ Group and is a logical step in the commercialisation strategy which QinetiQ set out at IPO.
The fund, which will be structured as a Limited Partnership (“LP”) managed by an independent investment manager, will have initial assets of £40m. QinetiQ and Coller Capital will each contribute up to £20m of follow-on funding to accelerate development of the fund's portfolio companies. Depending on the performance of the fund, QinetiQ will own up to 75 per cent of future economic value.
The new fund's portfolio will comprise partial or wholly owned interests in seven venture assets. QinetiQ's core venture businesses – such as QinetiQ Airport Technologies (with its Tarsier runway debris detection system) and the high-sensitivity GPS business – will remain within QinetiQ’s internal venture structure.
The creation of the new fund will free QinetiQ's existing venture team, led by Hal Kruth (chairman, QinetiQ Ventures) and Mike O'Connor (managing director, QinetiQ Ventures), to bring greater focus on incubating core businesses and developing QinetiQ's pipeline of new commercial ventures.
Stephen Lake will leave QinetiQ to become a managing partner of Cody Gate Ventures LLP, the investment manager of the new fund and will be joined in the managing partner role by Michael Summers, a former vice president of SRI International, based in Menlo Park, California. Collectively Michael and Stephen have more than 55 years' experience in forming, accelerating the development of and realising value from a wide range of early-stage technology ventures.
Hal Kruth, chairman of QinetiQ Ventures said: "The creation of QinetiQ Ventures LP reflects a continuing focus on enhancing QinetiQ's value creation from cutting edge technologies. It enables us to accelerate value creation within our existing portfolio and provides a long-term model for scaling up our future venturing activities."
He added: "Coller Capital brings to the partnership not only additional capital but a wealth of experience in accelerating value creation from corporate technology venture portfolios. The new fund will allow us to focus QinetiQ's internal resources more effectively on creating a steady pipeline of additional venture opportunities."
Jeremy Coller, chief executive officer of Coller Capital whose corporate venture activity includes British Telecom, Shell and Lucent said: "QinetiQ is a world leader in cutting-edge defence and security technologies. Through this joint venture, we will help QinetiQ to make more money faster through an enhanced engagement with commercial markets.”
About QinetiQ Ventures LP
The assets to be transferred into QinetiQ Ventures LP at inception (and QinetiQ’s interest in these businesses pre-transaction) are:
Aurix Limited - Real-time audio mining (88 per cent subsidiary)
Metalysis Limited - Manufacture of high value metals from low-cost oxides (16 per cent investment)
Omni-ID - Low cost passive RFID technology that works anywhere (100 per cent owned)
QinetiQ Nanomaterials Limited (QNL) - Nanomaterials IP creation, design and manufacturing (100 per cent subsidiary)
Quintel Technology Limited - Next generation antenna systems for mobile networks (50 per cent joint venture)
Stingray Geophysical Limited - 4D sea bed reservoir monitoring systems (19.9 per cent investment)
ZBD Displays Limited - Zero power point of purchase display solutions (31.6 per cent investment)
Completion of the transaction is expected by the end of July 2007 and is conditional upon the transfer of certain of the venture assets into the fund. The LP will be accounted for as a joint venture by QinetiQ using the equity method of accounting. Cody Gate Ventures LLP, the investment manager of the fund, is in the process of obtaining final FSA Authorisation.