[MEECF] Menire Corp. SHS - small Finnish venture capital firm
Menire seeks wireless profit line
Finnish tech holding company in rights offer
By Thom Calandra , CBS MarketWatch.com
Last Update: 3:40 AM ET Jun 26, 2000
LONDON (FTMW) -- Menire, a small venture capital firm little known outside its home base of Finland, said it?s poised for several blockbuster technology investments.
?What the market wants now is proof that you can really perform,? managing director Peter Seligson said. ?We want that from the companies we invest in and the market wants that from us.?
Menire thus far has shown an ability to place minority stakes in up-and-coming wireless developers such as Hantro Products and in electronic marketplaces such as Britain?s PaperX.com. Still, like Sonera (SNRA) , Finland?s dominant telecoms company, Menire has suffered in the stock market.
Menire shares have lost more than 75 percent of their value in the past six months. From an intraday high of 21 euros, Menire?s shares now trade for about 5 euros on the Helsinki stock exchange. Still, the company expects to raise about $12 million this week in a rights offering to existing shareholders and will use the money to invest in wireless ventures.
Investors in general are disenchanted with the idea of technology incubators, says Seligson, who at 36 is trying to follow up on a successful investment banking career in Finland. Across Europe, tech holding companies such as Brainspark (UK:BSP) and 365 Corp. (UK:TSF) in the U.K. have suffered steep declines in their share prices.
Fast wireless clip
?The market wants to see a track record from us,? Seligson told me by telephone form his home, ?the ability to exit from some of our investments with a profit.
During two years of investing in 15 companies, Menire has turned a profit in the sale of just two stakes. ?Too small to matter,? says Seligson, who took over earlier this year from Kari Happonen, who is running an affiliated Menire company, Terra Nova Solutions.
As he spoke, Seligson said he was playing a popular Scandinavian board game called Star of Africa with his young daughter. In the game, participants move around Africa looking for the star. Along the way, they collect stones, some of them worth money and others worthless.
Seligson says Menire is building partnerships with tech firms at a fast clip. Menire?s portfolio includes Hantro, which develops wireless telecom products; and PaperX.com. Menire owns just under 10 percent of PaperX.com, an online marketplace for paper. Based in Britain, PaperX.com hopes to win a piece of what some say is a $200 billion North American pulp and paper market.
Menire also owns a third of TerraNova Solutions, an online and wireless technology consultancy that is building a mobile stock-trading service for investors, along with a unit of the vast Finnish holding company Sonera. Another Menire holding, Tieto-X, a personnel firm, has been listed since last September.
Net from net
With such a vast portfolio of wireless and electronic-commerce companies, you'd think Menire's shares would trade at a significant premium to their net asset value. Not so. The company's net asset value per share after taxes is about 2.9 euros, and Menire shares these days sell for 5.2 euros. A euro is worth about 93 U.S. cents.
Menire, like many holding companies, values almost all of its holdings at cost. Thus, the company's net asset value will only reflect the potential of its portfolio of technology companies if and when Menire sells a stake. Menire showed a profit of 2.2 million euros in its most recent quarter, thanks to the sale of a company stake.
Seligson says he would like to list the company?s shares on Nasdaq. Before that happens, he will need to bulk up the company, whose market capitalization after the rights offering this month will be about $60 million.
With cash from the rights offering, Seligson says his small team of venture capitalists will search Finland, Sweden and the U.S. for wireless ventures that could change the way Europeans and Americans conduct their work and leisure lives. Menire places board members on each of the companies it backs.
Seligson said that when Menire?s shares soared as high as 21 euros, ?people were in a much more speculative mood. That can happen again if we build up the deal flow.?
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