http://www.ternplc.com/ TICKER: TERN     EXCHANGE: AIM

Tern Plc is an AIM-quoted investment company focussed on the fast changing IT sector. It aims to get value from proven IT businesses in order to maximise shareholder value.


Value enhancing acquisition
Published: Apr 21 2016

We are pleased to make available a note from Peterhouse Research on Tern Plc:
Tern is an investment company. It identifies technology companies with strong, innovative products focused on the mobile and cloud sectors, and invests expertise and finance to help them capitalise upon identified commercial and competitive advantages in fast-changing growth markets.
Today's acquisition by Cryptosoft, Tern's largest investment, of Californian security software specialist, Device Authority Inc, crystallises the value inherent in this maturing business, which has not up to this point been reflected in Tern's balance sheet.
Furthermore, the acquisition should materially enhance Cryptosoft's competitive advantages. It combines two complementary portfolios of proven data security solutions suitable for Internet of Things (IoT) and Machine-to-Machine (M2M) communications. It adds scale, a broader development engineering team, improved geographical spread and new authentication technologies backed by nine granted patents, with more pending.
Our view of current NAV at 11p/share is adjusted for the acquisition with other stakes held at cost/last investment round. However, Tern's valuation and prospects will pivot on this increased potential, and management's ability to devise and implement strategies for each of its portfolio companies to help them expand, build value and ultimately achieve exit at a multiple of current book value.
Investment in Cloud & Mobile Technologies
Published: May 05 2015

Tern invests in established, private software companies which operate in fast growing technology sectors such as mobile and cloud-based technologies. It adds value to its investments by helping them set and achieve new strategic objectives. 
Current holdings consist of one major (Cryptosoft 100% equity stake) investment and three minority stakes (each below 1%), in private technology companies, acquired between 2013 and 2014. These companies all fit the investment profile, with established products (based upon owned IP) and customer bases, and growing revenue outlooks as they approach potential exits.
The executive team has a strong investment track record and ready access to the skills required to help growth companies to achieve their full potential. This includes provision of advice on business-to-business (B2B) sales and marketing strategies, preparation for product testing and commercial launch, creation of in-house sales resources and help securing strategic and commercial partnerships.
Tern has targeted 100% compound IRRs and exits within three years of initial investment. Cryptosoft is by far the most material component of the current portfolio; on Tern's projections c 95% of potential portfolio return. If it achieves its target, net returns will certainly be equivalent to a multiple of the current share price.