|Tera Global Innovation Fund-December 2022||Price: $67.51|
(Tera Innovation LP Distributions: ’19-$43.45- Return of Capital)
The net asset value increased 8.0% in 2022 from slight price changes in the 3 core holdings. Combined with the cash distribution in 2020, the total LP value is $110.96, excluding tax benefits.
The three main private holdings, ViveCrop, Pesa and Solace have been in the portfolio as long as 15 years. This is a very long time. However, don’t confuse a longer hold duration with bad companies. Combined revenues now exceed $110M per year, with overall revenues and bookings up for the year.
There were no material transactions in 2022. Redwolf, a small investment based in Waterloo that does cybersecurity threat simulation, repaid debt and interest that completely covered the LP investment.
As the holdings are older, are they still relevant? The answer is “Yes”. ViveCrop creates solutions that combines the improvement in crop yields with the reduction of toxins and consumption of water. Global agriculture is being hard hit from environmental change. ViveCrop solutions may indeed be more relevant today, than a decade ago. Pesa provides cybersecure, government certified mission critical video solutions. With the dramatic increase in hostile cybersecurity and insider attacks on DoD and critical infrastructure, Pesa is shipping advanced capabilities at the right time. The 2022 increase in bookings are at the highest level since Tera has been involved. Solace, a secured data transaction company is also seeing tremendous growth. The focus on securing data across a network of applications ensures end to end cybersecurity. Headquartered in Ottawa, the newspaper named Solace as one of three local companies that has the opportunity to generate $1B of revenue per year.
As the holdings are private, and the LP is in wind down with subscriptions closed for quite some time, the modest increase in valuation is based on very slight changes from 2022. There was only one capital raise done within the portfolio companies. Vivecrop closed a financing in the Fall. The Vivecrop valuation in the portfolio is at 39% discount to this latest financing. While not a financing, but provider of significant capital, Pesa closed the largest government order in its history and Solace has plenty of cash. As such, the portfolio companies are well capitalized heading into 2023.
We remain optimistic that the liquidation values will provide some significant upside to the Net Asset Value.
As the LP contains private companies only, comments and pricing will be distributed and updated semi annually or when significant news. Distributions will occur with future liquidity events.