A £1.2 million investment from Finance Yorkshire's Equity Linked Fund will be used by an innovative technology business to expand its North Yorkshire operations, build new laboratory facilities and secure new contracts.
Peratech, which has its headquarters in Brompton on Swale near Richmond, is the world leader in Quantum Tunnelling Composite technology, which was invented by David Lussey, Chief Technical Officer.
QTC™ Materials are a unique class of materials developed to advance the capability of switching and sensing systems and are already widely used in robotics, defence and telecommunications. QTC™ Material has unique properties; while in an unstressed state the QTC™ Material is a near-perfect insulator, with any form of deformation the material starts to conduct and with sufficient pressure metallic conductivity levels can be achieved.
It was the flexibility of Finance Yorkshire's portfolio of funding options that helped agree the £1.2 million mezzanine deal - a loan investment deal with a small equity-linked exit bonus which suited the company's current requirements and future expectations.
Chief Financial and Operations Officer Doug Balderston said: "We're in a strong position in that we don't need the money now as we're capable of organic growth through the customers and contracts we currently have. "But the technology sector grows very fast so leaving it to organic growth alone puts us at a disadvantage because it risks being left behind by competitors. At the moment, we don't have any competitors, but that's not to say we won't have in the future.
"We have used equity or loan investments in the past, but the mezzanine investment deal helps take into account where we will be in the next three to five years and was therefore a better fit for our business model and strategy than perhaps a straightforward equity investment may have been."
Peratech recently won in the Innovation category at the Queen's Awards for Enterprise for its QTC™ Technology. It also took the title of British Venture Capital Association (BVCA) Regional Management team of the year award 2012 for the north east.
Now the company is looking to build on its successes by using the Finance Yorkshire investment to grow the business even further.
Said Doug: "David's experiment to find a conductive adhesive went wrong and resulted in the creation of QTC™ Material - and that is now the basis for a Yorkshire company that has generated millions of pounds worth of sales around the world.
"In the next three to five years, we expect to grow our customer base and increase the value of the business to in excess of £100m.
"We already have a number of significant contracts around the world including Japan and the U.S which are being managed by our in-house team very effectively. However, we have a desire to grow further and attract more contracts and to do that we need to expand our operations and invest in resources, staff and research and development.
"The Finance Yorkshire investment will help us take on more staff and expand further into our office space. We are also building an advanced laboratory to facilitate enhanced production."
Finance Yorkshire Investment Director Ash Chopra said: "The funding provided by Finance Yorkshire demonstrates the breadth of our offering. Peratech is a profitable, established business and has an excellent management team. As such a mezzanine funding option was appropriate for the business rather than a straight equity deal."
The Equity Linked Finance fund is flexible and, as well as providing equity investment, also offers a mix of debt/mezzanine finance. The team is headed up by Investment Director Andrew Burton.
Finance Yorkshire provides seedcorn, loan and equity linked investments, ranging from £15,000 to £2m to help a range of small and medium sized businesses to meet their funding requirements for growth and development.
The project is supported financially by the European Union. It has attracted £30 million investment from the European Regional Development Fund (ERDF) as part of Europe's support for the region's economic development through the Yorkshire and Humber ERDF Programme, £15 million from Yorkshire Forward's Single Programme, and £45 million match funding from the European Investment Bank.
For more information about Finance Yorkshire, please visit www.finance-yorkshire.com or ring 0845 649 0000.
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Caption:Finance Yorkshire Equity Team Investment Director Andrew Burton (left) with Peratech Chief Financial and Operations Officer Doug Balderston
About Finance Yorkshire
- Finance Yorkshire can provide seedcorn, loan and equity linked investments, ranging from £15,000 to £2million, specifically to help small and medium sized businesses meet the gaps in the market for the funding they need for growth and development.
- Finance Yorkshire has been developed as a European JEREMIE* initiative and is capitalised by grants from Yorkshire Forward's Single Programme (£15m), European Regional Development Fund (£30m) and finance from the European Investment Bank (£45m). (*JEREMIE stands for Joint European Resources for Micro to medium Enterprises)
- Finance Yorkshire invests in businesses based or moving to areas within Yorkshire, the Humber, North Lincolnshire and North East Lincolnshire.
Finance Yorkshire Ltd is a company limited by guarantee (Registered No 07075478). Finance Yorkshire Ltd (0845 649 0000) comprises three sub funds, Finance Yorkshire Equity Fund, which is managed by Neon Capital Partners Limited, Finance Yorkshire Small Loans Fund, which is managed by EV Business Loans Limited and Finance Yorkshire Seedcorn Fund, which is managed by Enterprise Ventures Limited. Each of these Fund Managers is authorised and regulated by the Financial Services Authority.