Sigma to sell stakes as it moves to property

By Peter Ranscombe
Published on Thursday 26 January 2012 00:00

SIGMA Capital, the Edinburgh-based investment manager in which Sir Tom Hunter’s West Coast Capital (WCC) holds a 22 per cent stake, is preparing to sell its holdings in a host of companies as it shifts its focus into property.

Four of the firm’s six venture capital funds are moving into their “realisation” phase, selling stakes to generate “strong cash flows” for Sigma.

Funds disposing of assets include the Sigma Technology Venture Fund, which has shares in Dundee-based cash machine software company I-Design and computer modelling firm DEM Solutions, based in Edinburgh.

But Sigma will be hanging on to its renewable energy investments, which include stakes in wave energy developers Aquamarine and Pelamis.

A spokeswoman for the Sigma said: “Over the next few years, the four funds are realising their holdings in their investee companies. The two remaining funds are both the renewable funds.”

In yesterday’s pre-close update, Sigma said it expects to swing to an operating profit for 2011 after shifting its focus to property.

The firm bought InPartnership, an urban regeneration outfit, from WCC in August, with work on projects in Liverpool, Manchester and the West Midlands now progressing at an “unprecedented” level.

InPartnership’s regeneration work has been valued at £2 billion and WCC will receive a £3.1 million slice from the first £10m-worth of profits generated by the schemes, followed by 10 per cent of any further surplus.

InPartnership had been owned by collapsed banking giant HBOS, WCC and one of its subsidiaries, WCC Trading.

Sigma said it also expects to cut its pre-tax losses in half to less than £500,000, with revenues rising to £2.4m from £1.8m.

Exceptional items that will affect the company’s bottom line include a £1m writedown in the value of its investment in Frontier IP, a firm that helps universities to commercial their inventions and services.

Frontier IP was spun out of Sigma Capital in May 2009 and switched stock exchanges from the Plus to Aim in January 2011.

The firm saw its share price fall from 59p to just 25p over the past year, forcing Sigma Capital to write down the value of its holding in the Frontier IP.

Sigma’s full-year results are expected to be released in April.

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