Published on: August 1, 2022

A hybrid VC model to access the IoT opportunity

Tern recently issued a strategy update following the termination of its proposed acquisition of Pires Investments plc. While the termination was disappointing given the complementary portfolio potential from Pires, we believe that focus should shift to Tern’s hybrid VC model and the value and organic growth potential from its own network of companies. In our view, pressure to realise cash through an exit is unfounded given the timeframe required to deliver maximum value to shareholders by preparing a business for harvest. Coupled with delays due to Covid, we believe this would make an immediate exit premature. The group has delivered consistent valuation uplifts, with 35% year-on-year total net asset growth achieved in FY21. Tern remains focused on the route of value creation and ultimately exit at the appropriate time, and has the model to succeed in this.

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