INVESTORS in a Scottish venture capital trust will share a £10m windfall from its investment in Wolfson Microelectronics, which floated on the stock market last month.
Shareholders in Enterprise Capital, the Edinburgh-based trust run by JO Hambro, will receive the payout after the trust sold its 7.8% holding in the firm for £14.4m. It had bought the stake several years ago for just £1.4m.
The huge gain saw the
net assets of the investment trust more than double in the past six months.
"The prime reason for this substantial increase was the successful flotation of Wolfson," said chairman Peter Dicks. "We have been a long-term supporter of Wolfson and are very pleased to see our confidence in the company vindicated."
Dicks said the trust had decided to sell all its holding in Wolfson when it came to market in keeping with the current aim of the trust to realise its holdings and return cash to shareholders.
The success of Wolfson offset the trust’s likely losses on another of its Scottish investments, Motherwell Bridge.
Dicks said it was "highly unlikely that any value will be recovered" from the company’s holding in the engineering group.
After the sale of Wolfson, the trust’s cash and liquid resources amounted to approximately £14.5m, worth 136p per share.
The trust is limited to the amount it can distribute to shareholders under its rules and it is planning to give investors 95p a share, equivalent to £10m, later this month.
The trust, which is due to have a winding-up vote next year, said it would continue to try to find buyers for the few remaining private company investments in the portfolio.
The trust is one of a string of Scottish-based investors to have made huge gains from backing Wolfson in its early days.
Scottish Enterprise made an £18.7m profit after selling its entire stake in the Edinburgh-based chip maker.
It had held 9.27% of the company before selling its shares at 210p each prior to the public flotation.
SE had invested an initial £250,000 in Wolfson in 1994.
The money raised through the share sale will be returned to the Scottish Executive.
Edinburgh City Council also sold its entire holding of 569,440 shares in the company.
Wolfson’s flotation also made paper millionaires of David Milne and fellow founder and chief technical officer Jim Reid.
Wolfson, which designs and supplies integrated circuits for use in a variety of hi-tech devices, such as DVD players, games consoles and digital cameras, went to the market in October.
The company raised £25m of new money through the flotation, which it plans to use to strengthen its sales and marketing departments and develop new products.
Shares in Wolfson have risen by 20% since flotation and closed on Friday at 252.25p.
Wolfson was the first semiconductor company to come to market since Infineon was spun out of Siemens in 2000, and was the biggest hi-tech float for three years.
The full article contains 527 words and appears in Scotland On Sunday newspaper.
