Vela puts £0.75m into integrated circuit company EnSilica

Technology investment company Vela has invested £0.75m in EnSilica, it announced on Monday, which it described as a fabless semiconductor design business focused on custom mixed-signal application-specific integrated circuits (ASICs).

The AIM-traded firm said the investment was in the form of convertible loan notes, and was part of a pre-initial public offering funding round being undertaken by EnSilica to raise up to £1.5m.

It said EnSilica focussed on the design and supply of custom mixed-signal ASICs to system companies and original equipment manufacturers, managing the manufacturing process end-to-end.

The fabless mixed-signal ASIC supply model was said to be a “proven scalable platform” to deliver both growth and profitability, Vela explained.

EnSilica has ASICs developed or under development across the satellite communication, automotive, industrial and healthcare markets.

Mixed-signal and radio frequency ASICs play a key role in differentiating EnSilica's customers' products in those markets, the company added.

It said the funds raised would enable EnSilica to continue to support its existing client base alongside additional investment in new customer ASICs, the supply of which would support future revenue growth and profitability.

The proceeds would also provide working capital to support EnSilica.

Unaudited accounts showed that EnSilica generated revenue of £8.4m, and an adjusted EBITDA of £0.8m in the year ended 31 May, and that at that date its net assets totalled £3.9m.

According to unaudited management accounts, in the six months ended 30 November, EnSilica generated revenues of £7.3m.

Vela said that under its agreement with EnSilica, it subscribed for £0.75m of unsecured interest-bearing convertible loan notes in the firm, satisfied from its existing cash resources.

It said interest would accrue on the notes at a rate of 10% per annum, with the notes repayable on 9 January 2023 to the extent not previously repaid or converted.

interest would accrue and be paid on the repayment date, and the notes would automatically convert into new ordinary shares in EnSilica at a 12% discount to the offer price on an IPO of EnSilica.

Vela said the loan notes were transferable only with the prior consent of EnSilica.

“EnSilica perfectly fits Vela's criteria for investment,” said Vela executive director James Normand.

“Its specialist expertise in the semiconductor field and in particular in application-specific integrated circuits puts EnSilica firmly in the 'disruptive technology' space.

“Moreover, a public listing for its shares, which EnSilica expects to achieve in the first half of this year, and the terms attaching to Vela's investment are attractive and provide the potential for meaningful gains for Vela as EnSilica puts its expansion plans into effect.”

At 1224 GMT, shares in Vela Technologies were up 0.75% at 0.04p.