Stonegate Capital Partners Initiates Coverage on Safeguard Scientifics, Inc.

Accesswire 20-Mar-2017 4:30 PM

DALLAS, TX / ACCESSWIRE / March 20, 2017 / Stonegate Capital Partners initiates research coverage on Safeguard Scientifics, Inc. (NYSE: SFE).

Company Description

Safeguard Scientifics, Inc. (NYSE: SFE) is a publicly traded private equity and venture capital firm that provides growth capital to early stage businesses. Safeguard has a noted track record of cultivating innovation and building market leaders that spans more than six decades. Safeguard provides the relevant expertise and capital to fuel the growth of technology-driven businesses in financial services, digital media, and healthcare. Safeguard targets companies that utilize the next wave of enabling technologies with a particular focus on the Internet of Everything, enhanced security, and predictive analytics. Safeguard is a proven partner for entrepreneurs looking to accelerate growth and build long-term value in their businesses.

Summary

Safeguard Scientifics provides investors the unique opportunity to hold liquid equity stakes in early- and growth-stage technology companies and has a storied record of realizing value of said companies through selective, well-timed exits.

  • Safeguard's business model involves acquiring positions in early- and growth-stage technology-driven businesses in financial services, digital media, and healthcare. Safeguard targets companies that have competitive advantages and are currently operating in large and/or growing markets and in areas with high barriers to entry.
  • SFE's investment strategy can be summarized as: acquire significant minority positions, between 20% and 50%, in early- and growth-stage companies with attractive growth prospects; provide hands-on strategic, management and operational support; hold positions in partner companies until they believe the risk-adjusted value has reached its highest point; use the proceeds of sales to pursue other capital deployment opportunities or for working capital purposes.
  • Safeguard looks for companies with total anticipated deployment of up to $25 million (initial capital requirements between $5 million and $15 million, and follow-on financing requirements of between $5 million and $10 million).
  • The Company's corporate staff of about 30 employees is committed to helping partner companies build and realize value through well-timed, selective exits of partner companies. Safeguard believes that these focuses will generate long-term value for their shareholders.
  • Safeguard management has equity incentive compensation that is structured to align with shareholder interests. In addition, there are ownership requirements of 2x-4x base salary for senior management.
  • At December 31, 2016, Safeguard had $337 million deployed into 29 partner companies, with a primary ownership percentage ranging from 20% to 44%. Safeguard looks to serve as the lead financial sponsor in a deal and Safeguard executives will serve on the board of directors of partner companies.
  • Safeguard has a proven track record of successful acquisitions of equity holdings, with 29 partner companies currently in the portfolio. We have conducted a sum-of-the-parts analysis of Safeguard's partner company positions to illustrate a more accurate valuation. Based on our analysis, we believe that Safeguard is significantly undervalued, without factoring in SFE's $225 million in NOLs.

The full report can be accessed by clicking the following link:

http://stonegateinc.com/reports/SFE_Initiation_Final.pdf

About Stonegate Capital Partners

Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high quality investment opportunities.

SOURCE: Stonegate Capital Partners