Braveheart seals WL Ventures deal

Published on Friday 6 April 2007 01:15

A STRING of Scottish technology companies specialising in everything from therapeutic pesticides to internet filtering are set to benefit from increased support and access to additional funding following the acquisition of investment firm WL Ventures by listed peer Braveheart.

The deal caps a busy seven days for Perth-based Braveheart. Its shares only began trading on AIM last Friday, while the group led a 2 million round of funding into Edinburgh-based life sciences start-up EctoPharma earlier this week.

Braveheart is paying an initial sum to acquire WL Ventures, which was set up in 1998 by West Lothian Council, with additional payments made from the proceeds of any investment exits.

Financial terms were not disclosed, although Braveheart chief executive Geoffrey Thomson described the deal as a "relatively small acquisition". Based on the last set of accounts for WL, the initial payment is unlikely to be more than a modest six-figure sum.

Thomson, who has a 20 per cent holding in Braveheart, said the takeover was significant as it boosted the number of companies in Braveheart's portfolio from 23 to more than 30. "We are going to be having a good look at the portfolio that we have bought," Thomson said. "A number of them we have looked at before, so we know them reasonably well.

"This is really a partnering deal. Effectively, WL closed up shop as they had invested their fund, and wanted a structure where they would retain an interest but wouldn't be involved in the management side. We have the ability to put more money in and nurture the investments, but they get a slice of the upside when we get an eventual exit."

In the past nine years, WL Ventures and the West Lothian Venture Fund have invested 2.4m in early-stage technology companies. Recently, the assets of the venture fund were transferred to WL, which had been funded jointly by HBOS.

Following yesterday's tie-up with Braveheart, WL will be renamed Caledonia Portfolio. Among the hi-tech companies in the portfolio are Livingston-based optical measuring specialist Scalar Technologies, the internet filtering software firm Bloxx, and EctoPharm, which is developing a non-toxic pesticide for the treatment of head lice.

Jim Dickson, director of West Lothian Council, said: "We established WL Ventures to nurture enterprise and we are delighted that Braveheart has acquired the portfolio to support the companies in their next stage of growth.

"We are delighted that our new small loans fund will be benefiting in the form of proceeds from any realised investments in the portfolio."

A spokesman for the council said the scheme would provide loans of up 25,000 to start-up and early-stage businesses based in West Lothian. He said the new fund should be launched "within the next few months".