Tern opts out of further investment in Konektio

Internet-of-things investor Tern announced on Wednesday that it has decided not to further invest in its portfolio company InVMA, operating as Konektio.

The AIM-traded firm’s decision followed its announcement on 26 May regarding Konektio’s £2.5m equity fundraising split into two tranches.

It said the first tranche was completed in May with a value of £1.2m.

As a result of Tern’s £0.1m investment in the tranche, Tern’s ownership stake in Konektio decreased to 28%, with an unaudited book valuation of £0.9m.

Tern initially committed to investing at least £0.28m in the second tranche, with the option to increase its investment to £0.4m.

However, due to Konektio’s business performance, notably its monthly recurring revenue growth falling short of Tern’s expectations, the company said it had chosen not to participate in the second tranche.

As previously disclosed, if Tern did not fulfil its commitment, 75% of its holding in Konektio would be transferred to a valueless class of Konektio deferred shares, which was expected to occur in the future.

Tern’s precise ownership percentage in Konektio and its unaudited book value would be determined on the successful completion of the Konektio second tranche.

The company did not expect to provide further funding to Konektio and intended to seek value realisation from its remaining holding in due course.

“Konektio provides an Industrial internet-of-things (IoT) software-as-a-service (SaaS) platform to original equipment manufacturers (OEMs) and aftermarket customers, as well as the connected product market,” Tern’s board explained.

“The software enables remote asset monitoring and management to drive productivity improvements.”

It said Konektio’s primary product, AssetMinder, is machine-agnostic and allows manufacturers to diagnose issues and proactively prescribe service plans, ultimately reducing downtime and improving operational efficiency.

“According to the latest filed financial statements for Konektio, for the 12-month period ended 31 December 2022, the business recorded an increase in retained unaudited losses of approximately £2m and at that date had an unaudited deficit of shareholders’ funds of approximately £0.3m.”

At 1122 GMT, shares in Tern were down 10.88% at 4.23p.

Reporting by Josh White for Sharecast.com.