Tern (LSE:TERN), the AIM-listed company focused on value creation from Internet of Things technology businesses, is raising approximately £509,368 before expenses through an underwritten open offer.
Qualifying shareholders can subscribe for 56.6m new shares at 0.90p each, a 25% discount to the 1.20p closing price on 4 September, on the basis of one open offer share for every 16 held.
CMC Markets UK has underwritten the offer in full, agreeing to take up any shares not subscribed by existing holders.
The new shares represent 5.88% of the enlarged share capital, which will total 962.14m shares once admitted.
Tern's board says the funds are needed to protect its direct portfolio, which includes Device Authority, FVRS and Talking Medicines, from "pay-to-play" dynamics now common among venture capital syndicates, where continued investor participation is linked to anti-dilution or reset terms that penalise non-participants.
The company warns that failing to fund alongside co-investors risks its stakes being "severely diluted or possibly even eliminated", cutting the value built in the portfolio and any future exit proceeds for shareholders.
Tern spent approximately £1.0m on operations and £0.5m on portfolio investments in the year to 31 December 2025, and has already implemented cost reductions announced on 9 October 2025 and exited its funding obligation to Sure Valley Ventures Enterprise Capital Fund LP.
The board reiterated a commitment, announced 28 July, to return at least 70% of net proceeds from any individual portfolio exit exceeding £1m to shareholders.
The open offer closes on 22 September, with admission and dealings expected to begin on 24 September.
News Intelligence what this means for the company
Tern is raising £509,368 via a 25% discounted open offer to fund follow-on investments in its portfolio companies and protect its stakes from dilution in venture syndicates that impose anti-dilution penalties on non-participating investors. The raise is material relative to the company's cash position: Tern held only £0.05m at end-2025, making this £509k injection roughly 10× its prior cash balance, though it must be weighed against the company's £1.5m annual burn (£1.0m operations plus £0.5m portfolio investments in 2025).
The raise addresses an immediate liquidity need to defend portfolio stakes, but the scale and discount signal financial pressure. The board's commitment to return at least 70% of proceeds from exits exceeding £1m to shareholders remains unchanged, though execution depends on portfolio companies reaching meaningful exit valuations.
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