Imperial’s ‘experiment’ reports a step-up in investments

It also announced its latest on-campus investment, a £375,000 bet on a new electric-motor spin-out from the university’s Department of Mechanical Engineering.

“The Group has successful stepped up its investment activity across the portfolio” during the fiscal year ended 31 July, according to a company statement. The £13.1 million in new investments was up from £1.9 million a year earlier; and, paired with co-investors, it raised about £40 million in all for new tech companies. It also said the average size of its investments rose, and the stake it is retaining in campus spin-out companies is being diluted less than in the past – one of the goals of the company, majority-owned by the university.

The company also reported a 16 per cent rise in revenues – partly from license royalties on Imperial inventions – to £5.1 million from £4.4 million a year earlier.  It reported a drop in net profit to £882,000 from £4.1 million a year earlier, largely because of a non-cash charge of £4.4 million for option and share awards to its staff.  It said the charge, a book entry that doesn’t affect cash flow or shareholders equity, reflects a change under international financial accounting rules to reflect the value of options and shares granted to staff.  It added that it will be implementing a new long-term incentive plan “in the near future.”

The announcement is the company’s first full-year report card as a publicly traded company – and suggests that the university’s experiment in technology transfer is showing some progress.

Rattling the crockery

Last year, Imperial College London – the third-ranked university in Britain after the Cambridge and Oxford – rattled the academic crockery with a string of unusual moves aimed at giving it more freedom to raise money, strike deals and rise in the international academic rankings. In July 2006 it became the second university in the world, after a smaller effort by Sheffield University, to float its tech-transfer operation. Its listing on the Alternative Investment Market of the London Stock Exchange raised £26 million – chiefly from a group of institutional investors. And later in the year, it announced that it will secede from the University of London system, of which it had been a member since its founding in 1907.

The flotation was intended to raise more capital for Imperial spin-out companies, and increase the ultimate return to the university – for instance, by making sure that the university’s interest in its spin-outs wasn’t diluted into insignificance by the arrival of later investors.

The step-up in investments last year reflects the company having built up its investment-management staff – as well as an expansion of investment opportunities, partly from the College itself but also from some off-campus tech start-ups. It said its cash on 31 July stood at £19.5 million, down from £32.5 million a year earlier. Its net assets rose to £53.6 million from £48.4 million. Its single biggest asset – representing 29 per cent of its portfolio – is its stake in the publicly traded Imperial spin-out Ceres Power.

Its latest spin-out investment is part of a £1.5 million fund-raising for EVO Electric Ltd., a company based on research by Michael Lamperth in Imperial’s Department of Mechanical Engineering. The new electric-motor technology, it said, has higher power density than existing models so it obviates the need for a gear box. Its flat shape also makes it good for installing in electric-car wheels.