VCT Industry Report 2015-16

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Hargreave Hale is a leading provider of investment management, stock broking and fund
management services in the UK. Founded in 1897, the business manages £5.0bn across
nine UK branches. Based in London, Hargreave Hale has one of the UK’s most respected
fund management teams managing in excess of £3.0bn. The team, led by Giles Hargreave, is
considered a highly active and well established investor in the UK small and mid cap space.
May 2013 - £440,000
Casinos & Gaming
Cambridge
70
Quixant is the world’s premier company focused exclusively
on the design and manufacturing of the most advanced PC
based computer systems for the global gaming industry. For
gaming machine manufacturers, the sophisticated computer
systems that are optimised for casino gaming and slot machine
applications are an important enabling technology. They are not,
however, a source of profit and do not drive sales. The hardware
specification, and compliance to it, is highly regulated and closely
monitored. In effect, in-house production of these complex
systems creates little value whilst representing a cost centre
(that requires working capital) and a source of regulatory
risk. Quixant allows manufacturers to short cut their product
development cycle, reduce cost and improve their return
on capital through the supply of key parts of the system
hardware. Quixant supplies systems to blue chip slot machine
manufacturers all around the world.
RATIONALE FOR INVESTMENT: Quixant is a profitable,
cash generative business that provides a clear value add to
the wider industry. Quixant’s clients are able to introduce
new products to market more efficiently and with less risk.
Key to this is Quixant’s in-house engineering capability,
manufacturing and deep knowledge of the different regulatory
regimes in existence globally. These ‘know hows’ help define
Quixant’s unique market position. In contrast to the traditional
hardware supply chain, which is highly diversified and makes
use of layers of subcontractors, Quixant has established an
experienced and tightly controlled supply chain that understands
the regulatory constraints they must operate within.
VALUE ADDED BY VCT MANAGER: Hargreave Hale does
not seek to have an active role in the management of the
business. Hargreave Hale simply aims to provide capital to fast
growth early stage businesses.
GROWTH IN REVENUE AND EMPLOYMENT: Since
Hargreave Hale first invested in Quixiant in 2013, revenues have
grown from $24.2m in 2013 to $31.9m in 2014. Analysts forecast
revenues to the year ending 31 December 2015 to be $41m.
COINVESTORS: The Marlborough Microcap fund, also
managed by Hargreave Hale, has invested over £2m into the
company. Schroders and Octopus Asset Management are
other large institutional shareholders.
Nov 2013 - £480,000
Application Software
Manchester
142
Kalibrate provides technology-based price optimisation
and planning solutions for the global fuel retail industry. Its
solutions have been deployed by hundreds of retailers across
thousands of forecourts in 68 counties. Leveraging deep
industry experience, Kalibrate combines comprehensive data
and robust analytics to deliver dynamic customized insights
and solutions to clients through consulting engagements. From
executive suite to operational realities, Kalibrate knows how to
optimize and grow retail fuel and convenience stores for total
profitability, in a market where multiple vendors are in volume
driven competition with each other. Kalibrate has a blue chip
customer base including BP, Tesco, Safeway and 7-Eleven.
RATIONALE FOR INVESTMENT: Kalibrate is a market
leading, profitable and cash generative business operating in
a market which is approaching an inflection point. Structural
changes, including an increasing number of vendors and
regulatory pressures on retails, is helping drive demand in
established markets. The eventual de-regulation of markets
in India and China will seed additional growth in the long
term. Kalibrate’s solutions validate clear return on investment
for clients, as demonstrated with the impressive list of blue
chips. Kalibrate is currently moving its customer base away
from software license sales and onto a subscription fee and
managed services model, giving the company greater revenue
visibility as it enters each financial year.
VALUE ADDED BY VCT MANAGER: Hargreave Hale does
not seek to have an active role in the management of the
business. Hargreave Hale simply aims to provide capital to fast
growth early stage businesses.
GROWTH IN REVENUE AND EMPLOYMENT: Since
Hargreave Hale first invested in Kalibrate in 2013, revenues
have grown from $24.2m in 2013 to $32.5 in June 15. Analysts
forecast revenues to the year ending 31 June 2016 to be
$35.8m.
COINVESTORS: The Marlborough Microcap fund, also
managed by Hargreave Hale, has invested over £2m into the
company. Schroders and Octopus Asset Management are
other large institutional shareholders.
020 7009 4900