Winner: Orchestream plc
Highly commended: Schiper plc
Highly commended: Bookham Technology
Selecting a realisation of the year proved a difficult task. It would seem sensible to take a purely quantitative approach whereby the most money made in the shortest period of time takes first place. But given that it is simply not possible to pull this type of data together in a fully comprehensive manner an element of qualitative judgement forces itself into the equation. Realisation was interpreted by the judges as an exit, even if only partial in the case of an IPO, from the private equity-backed market. This decision is bound to disappoint some readers because there have been some spectacular returns achieved for investors via the secondary buyout exit route. The partial exit via an IPO and lock-in period attached to such has meant it is difficult to determine the real gain on the investment given turbulent market conditions, particularly over the last two quarters. Likewise trade sales satisfied by either partially or in totality by a share exchange with lock-in periods attached is subject to the same issues.
Orchestream is the winner of evcj’s 2000 Realisation of the year award. Despite this year having seen its price (opening at 131.50 pence on April 2, 2001 – the date evcj’s 2000 awards were announced) fall below its offer price of 185 pence on June 28, 2000, even at its current depressed share price the company represents an incredible return for investors. In addition to an incredible return it managed to float at a time when technology stocks had taken a tumble and confidence in its sector was seriously undermined. The Orchestream story, from its foundation in 1996, has been well told. Seed investors were Celtic House and Providence Investors and unnamed business angels. By June 1998 Quester Ventures Partners led a first round funding of $3.5 million which was also supported by Newbury Ventures, Celtic House, Providence International and the unnamed business angels. In November 1998 a second round of funding of $8.2 million was led by Atlas Ventures and supported by Amadeus Venture Partners, Kennet Capital, Quester Venture Partners and Reuters. Reuters, alongside Deutsche Bank, went on to provide a third round of funding, worth $16.4 million. In December 1999 Intel made a strategic investment for a minority stake in Orchestream. At the time of flotation Quester Venture Partners and Atlas Venture were the biggest venture capital investors in the company.
Highly commended: Scipher. Scipher joined the London Stock Exchange official list in February last year and in so doing gained a valuation of £330 million. Advent Venture Partners sold part of its holding in Scipher. Advent Venture Partners invested £5 million for a 14.3 per cent holding in Scipher last year. The sale of 30 per cent of its holding at the issue price of 380pence per share returned 2.4 times the entire cost of Advent Venture Partners’ original investment, net of expenses. Scipher’s share price during the last year has risen to around 700 pence per share and in the current share slump has fallen to 322.50 pence per share. Scipher was formed via a £3.7 million buyout from Thorn EMI’s central research laboratory division in 1996. The company’s revenues are derived from licensing various audio and information technologies to co-developers.
Highly commended: Bookham Technology. Bookham Technology was founded in 1998 and received its first venture capital investment of circa £4 million led by 3i in late 1996. 3i went on to support two further rounds of financing for the company, which were in turn followed by a strategic investor round. The company floated on the London Stock Exchange’s TechMARK at £10 a share in April last year and by September it had achieved a dual listing with a secondary offering on Nasdaq at £33.50 per share. Bookham, established by Dr Andrew Rickman, has developed a unique manufacturing technology, ASOC, for making components for optical networks, changing the economics of fibre optic components and the speed of roll out of fibre networks. The Bookham Technology investment, despite sitting at £3.20 per share (a far cry from the heady days of last summer when its stock was trading at over £50 a share), represents a remarkably successful investment for 3i. 3i retains a holding in Bookham Technology, which has played a significant part in the downward revaluation of 3i’s portfolio recently.