Peratech borrows £1.2m to grow faster
Peratech has borrowed £1.2m investment from Finance Yorkshire’s Equity Linked Fund will to “build new laboratory facilities and secure new contracts”, said the North Yorkshire, firm.
The company develops switches and sensors based on ‘quantum tunnelling composites’.
Invented by CTO David Lussey, QTCs are force-sensitive variable resistance elastomers, whose unstressed resistance is almost insulating.
“We don’t need the money now as we’re capable of organic growth through the customers and contracts we currently have,” said CFO Doug Balderston, “but the technology sector grows very fast so leaving it to organic growth alone puts us at a disadvantage because it risks being left behind by competitors. At the moment, we don’t have any competitors, but that’s not to say we won’t have in the future.”
The loan is a mezzanine deal – a standard loan, except that the lender also gets a percentage of any large income the borrower gets within a fixed term.
In this case, Balderston told Electronics Weekly, if Peratech goes public or is bought within eight years Finance Yorkshire will get “a single digit” share.
“We have used equity or loan investments in the past, but the mezzanine investment deal helps take into account where we will be in the next three to five years and was therefore a better fit for our business model and strategy than perhaps a straightforward equity investment may have been,” he said.
Since 2008, the firm has not just been selling QTC materials and printable QTC inks, but licensing various techniques for using it.
For example: if a thin gasket of QTC used to bond a touch panel to its surround, then a third dimension can be added to the touch screen by measuring touch force through the gasket’s resistance.
“We licence and collect royalties as well as supplying inks,” said Balderston. “We already have a number of significant contracts around the world including Japan and the US which are being managed by our in-house team very effectively. However, we have a desire to grow further and attract more contracts and to do that we need to expand our operations and invest in resources, staff and research and development.”
Existing contracts include one with Samsung for a five-way input device for phones.
Although figures are not discussed, Peratech has been “profitable for the last three years”, said Balderston. “In the next three to five years, we expect to grow our customer base and increase the value of the business to in excess of £100m.”
In this case, he said, £100m is based on predicted profit of £5m and a price-to-earnings ratio of 20. “I believe 20 is achievable,” he said.
Finance Yorkshire Director Andrew Burton (left) with Peratech CFO Doug Balderston
Finance Yorkshire provides seedcorn, loan and equity linked investments, ranging from £15,000 to £2m to small and medium sized businesses for growth and development.
It has attracted £30m from the European Regional Development Fund (ERDF) as part of Europe’s support for the region’s economic development through the Yorkshire and Humber ERDF Programme, £15m from Yorkshire Forward’s Single Programme, and £45m match funding from the European Investment Bank.