Illuminator, an early-stage Internet and technology investor, has announced it is launching a turnaround investment vehicle called the TechRescue Fund. The fund hopes to raise GBP50 million to GBP100 million to invest in listed and unlisted dot.com and other ailing high tech companies mainly in Europe and the UK.
Illuminator has already committed GBP5 million to the fund, and is currently awaiting IMRO authorisation for a subsidiary to manage the fund. It is hoped that the remaining capital will be raised from both individuals and institutions, the minimum investment being GBP500,000. The fund is structured as a series of limited partnerships with an initial life span of seven years.
TechRescue is sponsored by Shore Capital and Corporate. Illuminator owns 22.5 per cent of Shore Capital’s Puma II investment fund.
The idea for the fund was first aired last year in connection with Illuminator. Brian Myerson and Julian Treger established Illuminator in June 1999 to develop e-commerce business opportunities. Myerson and Treger have been investing in distressed old economy companies since the early 1990s, most notoriously the shake-up of clothing group Aquascutum and the successful bid for London’s famous West End retailer, Liberty. The pair
have been labeled corporate raiders for their past activities through fund management group, Active Value Advisors Limited.
Drawing on the experience of Active Value Advisors Limited the TechRescue Fund will take significant stakes in fundamentally sound companies while valuations are pessimistic, capitalising on negative current market conditions and investor sentiment. TechRescue will be sourcing its deal flow from receivers, accountants, lawyers and venture capitalists looking to off-load faltering technology investments. The fund hopes to return VC funded companies to profitability, actively combating problems such as unrealistic revenue projections, fragmented markets, weak management, high overheads and an inability to secure follow-up funding.
TechRescue has enlisted the support of several consultancies to help it evaluate potential investments and then rectify the existing problems. These include Postern, (which provides cash and management in turnaround situations), Valoris and Halogen (European technology and strategic consultants.)