Tern PLC shares dropped on Wednesday morning, as it said it has decided not to invest further in its portfolio company InVMA Ltd, which trades as Konektio.

The investor specialising in supporting early-stage ’internet of things’ technology businesses said the news follows its announcement in May that Konektio had agreed a £2.5 million equity fundraise, to be completed in two tranches.

Shares in Tern plummeted by 15% to 4.05 pence each in London on Wednesday morning.

Konektio completed the first £1.2 million tranche in May 2023, with the second £1.3 million tranche due for completion in the fourth quarter of 2023.

Following its investment in the Konektio first tranche of £100,000, Tern said its shareholding reduced to 28% and had an unaudited book valuation of £900,000. In May, it said it had committed to invest a minimum of £280,000 in the Konektio second trance, with an option up to £400,000

‘However, given the business performance of Konektio and, in particular, Konektio’s monthly recurring revenue growth not having met Tern’s expectations, Tern has decided not to invest in the Konektio second tranche,’ the company said.

As announced in May, 75% of Tern’s holding in Konektio will be transferred to a valueless class of Konektio deferred shares, should it fail to invest the minimum commitment in the Konektio second tranche.

This is now expected to effect in ‘due course’, with Tern saying it does not at this time ‘envisage providing any more funding to Konektio and the company will look to realise value from its remaining holding in Konektio in due course’.

Tern also said its percentage holding in Konektio and its unaudited book valuation will be determined ‘when, and if, Konektio completes the Konektio second tranche’ and that it will provide an update on this ‘at the appropriate time’.

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