Powerhouse is having its Australian IPO - could university research cash be about to explode?

Powerhouse is hoping to raise up to AU$20 million from its Australian IPO. If it takes off, it could have big implications for how universities commercialise their research.

While it’s unquestioned that the work that comes out of the ivory towers and sci-fi laboratories of universities can often be world-changing, it’s about equally well-known that marketing such developments hasn’t always worked out. But the pile of money available as a result of research commercialisation is ballooning – and it could be about to get a whole lot bigger.

Intellectual property commercialisation company Powerhouse Ventures has begun its Australian initial public offering. The company is hoping to raise AU$20 million from the IPO by September, so it can be listed on the ASX stock exchange.

The IPO is a big deal in the world of intellectual property and research funding. Over the past seven years Powerhouse, which identifies and invests in scientific and technical innovation developed at New Zealand and Australian universities, has worked to establish a diversified investment portfolio while helping commercialise ideas and research.

Unsurprisingly, Powerhouse chairperson Kerry McDonald is enthusiastic. “Powerhouse is pleased to be able to offer investors the opportunity to gain exposure to the company’s existing New Zealand-based portfolio, together with an emerging pipeline of commercially attractive investment opportunities in Australia and New Zealand.”

Powerhouse chairman Kerry McDonald.

Powerhouse is offering 9,345,794 to 18,691,589 shares at AU$1.07 or NZ$1.14 per share, with the goal of raising between A$10 million (at a minimum) to A$20 million (maximum). Upon listing on the ASX, Powerhouse hopes to have a market capitalisation – based on the offer price – of A$30.8 million to A$40.8 million.

Alright, so it’s not the largest IPO in the history of the Universe. But for a company with a diversified investment portfolio of 19 ventures in the areas of clean-tech, agri-tech, healthcare and digital/ICT, ranging from early stage pre-seed through to more developed operations – with an internal rate of return of 34.6 percent since 2009 – it could potentially mean a lot more money flowing to the coffers of universities and researchers depending on public interest.

Recently, Powerhouse also announced its first Australian university spin-out, Ferronova, which aims to develop an enhanced cancer-detecting magnetic probe system with technology sourced from the University of South Australia. More money, of course, could mean more spin-off companies for similar research at other New Zealand and Australian universities.

Not that there isn’t already big money involved. It is estimated that approximately A$10 billion is spent annually on research funding for universities in New Zealand and Australia.

That’s a pie that, even when divided by pi, is still pretty big.