Kestrel Partners assists buyout of ClearSpeed

Kestrel Partners (Kestrel), the investment management company that specialises in listed smaller companies, has arranged for a new company, funded jointly by ZOE, a private family office, and Richard Farleigh, a business angel specialising in technology companies, to fund a management buyout of ClearSpeed Technology Limited.

ClearSpeed, the fabless semiconductor company supplying low power, high performance processor technology, services and solutions de-listed from AIM in June 2009 at which time the share price fell to 3.5p, giving the company a market capitalisation of c.£0.6m.  Kestrel seized this opportunity to acquire an 18% stake in the Company at 2p per share.

Having acquired its stake, Kestrel actively worked with ClearSpeed management to stabilise the business which culminated in a sale and leaseback of ClearSpeed’s intellectual property for $3.25m in August 2010.

Following further work resolving the Company’s contingent liabilities, Kestrel arranged for a newly incorporated vehicle, ZF Acquisitions, funded jointly by ZOE and Richard Farleigh to make a cash offer to all shareholders of 20p a share in March 2011. Those shareholders that wanted to retain an interest in ClearSpeed were able to do so by electing for the alternative offer which comprised 16.5p in cash and 0.07 new shares in ZF Acquisitions.

Kestrel elected for the alternative offer giving it a cash uplift of more than 8x in under two years whilst allowing them to retain an ongoing equity interest in the business.

Oliver Scott, Partner and Fund Manager said: “We have worked very closely with the ClearSpeed team in resolving several contingent liabilities and exploring future strategic options. This culminated in the sale to a US buyer of the Company’s patents and intellectual property in August 2010.  It is testament to the new management team that the buyer of these assets simultaneously granted ClearSpeed a perpetual licence over this intellectual property to allow ClearSpeed to continue operating and delivering product to its customers.”