Powerhouse Ventures (ASX:PVL) talks early stage investments


by Jessica Amir

Powerhouse Ventures Limited (ASX:PVL) chairman Russell Yardley talks early stage investment, stakeholder accountability and university collaborations.

Jessica Amir: Hi, Jessica Amir here with the Finance News Network. Joining me from Powerhouse Ventures is its Chairman, Russell Yardley. Hi, Russell, welcome.

Russell Yardley: Hello Jessica. How are you?

Jessica Amir: Good thanks. First up for those new to the company, just give us an introduction.

Russell Yardley: Powerhouse started a decade ago in New Zealand building relationships with Canterbury University and then all six of the research universities in New Zealand and today we're expanding with the 22 universities in Australia.

When I first looked at Powerhouse, I got really excited because I saw something unique. I saw something that I hadn't seen in Australia and what do we have here? We have a company that is finding great science in universities to take out to the world.

Jessica Amir: Now to your 2017 performance, just tell us about the 100 Day Plan?

Russell Yardley: The 100 Day Plan came out of the fact that 2017 was not the best year that Powerhouse could have had and the 100 Day Plan was to look at the investments that we made and to sell the best investments that have matured and SYFT was a very good investment and we were able to sell that before Christmas for over ten times what we paid for it. That was followed up by ArcActive, which we got four times our money and there's two more that we're working on today.

The second aspect of the plan was to really review our investment strategies and our processes to improve how we invest and how we realise those investments for the shareholders and the third aspect was to really expand into Australia and really work with CSIRO and some of the major universities in Australia to do what we've done so well in New Zealand.

The fourth aspect to the 100 day plan was to, in fact, build a network, a peer-to-peer learning network of board members, of chief executives and of senior executives to help our portfolio investment companies accelerate their journey.

Jessica Amir: Tell us about the reporting and the accountability?

Russell Yardley: Powerhouse started out at Canterbury University and we had the backing of the Christ Church Development Corporation and so took a lot of government funding to develop these portfolio companies, which is happening in every country around the world.

To be able to realise that, we've needed to really focus on what those companies are doing and our investments now have very strict milestones as to what our portfolio companies need to achieve to attract further investment and to grow.

Jessica Amir: Just a little bit more about what you're doing with Australian universities and the CSIRO?

Russell Yardley: We've been approached by New South Wales, Victoria and South Australia looking at where we need to place our base here in Australia. Paul Viney and the team have been working with all of the major universities, particularly the University of Melbourne, Monash, Deakin, CSIRO, but in South Australia we've got the Uni of SA, we're working with the University of Adelaide and Flinders. What we're trying to do is to be able to repeat the model of what we've done in New Zealand here in Australia.

Jessica Amir: Thanks Russell. Now to the portfolio itself. Tell us about the value of the investments and the spread.

Russell Yardley: When I was joining the board, I asked to meet with four critical companies: HydroWorks, Crop Logic, Invert Robotics and Motem, and together with Solar Bright and Veritide, those six companies have provided the great excitement and the real challenges of 2017.

HydroWorks, I can't say any more than I've said. It is now in the final stages of liquidation and that was our biggest investment. Invert Robotics is really exciting. They've just completed a six million dollar capital raise. On their share register are some of the most outstanding investors in this country and one of them particular I would judge as the best investor that I've ever seen in Australia. Motem is an exciting company because it's in the augmented reality space and that is booming around the world and we have some terrific technology in Motem and Powerhouse is funding the sale of that IP internationally.

That's just some of the taste of the 25 companies that we've got in our portfolio.

Jessica Amir: Now, tell us about the new editions, disposals and what are your targeted sales?

Russell Yardley: We really examined every investment and we looked at those where we had little influence, where our shareholding was small, where our model really no longer applied. We've exited two and there's probably another two we'll announce very shortly.

In addition to that, we've added four new companies. So, we've still got 25 exciting companies in our portfolio.

Jessica Amir: What has the portfolio returned since inception?

Russell Yardley: Traditionally, the portfolio has returned about 30% year on year and today the portfolio, with the right back from HydroWorks, currently the NTA's about $15 million. With an imminent announcement in February, I can't be more precise than that.

Jessica Amir: Last question, Russell. What's your focus for the next six months and remind us your long term ambition for the company?

Russell Yardley: To help our portfolio investment companies accelerate their journey. To be able to do more faster. To be able to become and win their global categories.

Jessica Amir: Well, Russell Yardley, an absolute pleasure. Thank you so much for the update.

Russell Yardley: Thank you, Jessica.