Established data network processing technology company admitted to AIM; £15 million raised by way of a significantly oversubscribed placing
London, 29 June 2017: Ethernity Networks (AIM: ENET.L), a data network processing technology company, is pleased to announce the admission today of its ordinary shares to trading on the AIM Market of the London Stock Exchange. Dealings in the ordinary shares will commence at 8.00am under the ticker ENET.L and ISIN number of IL0011410359. Arden Partners was sole bookrunner for the Placing and is acting as Nominated Adviser and Broker to the Company.
Ethernity is a technology solutions provider that develops data network processing technology used in high-end Carrier Ethernet applications across the telecom, mobile, security and data centre markets. The Company’s core technology, which is protected by five US patents and populated on programmable logic, improves efficiency and accelerates data processing in the provision of data and network services, thereby reducing power consumption and reducing the costs of maintaining network infrastructure by giving hardware systems the ability to add future-proof data processing functionality.
Ethernity’s technology offers a clear differentiation from other offerings as evidenced by strong customer traction. The Company has traded profitably and has sustained positive operating cash flow for a number of years, and over the last two years Ethernity has developed new product offerings based on validated technology for network performance acceleration that should generate growth for the Company in the coming years.
The Company’s software and firmware is already installed in over 400,000 systems globally in broadband access, mobile backhaul and Ethernet access applications. The reducing cost of the Field-Programmable Gate Array (FPGA) will enable the Company to target larger markets previously only served by Application-Specific Integrated Circuits / Application-Specific Standard Products (ASIC / ASSPs) and fuel increased demand across the Company’s core markets.
Existing virtualisation solutions are inadequate to support the exponential growth in IP data flows to data centres;
Traditional vendors relying on rigid hardware such as ASIC solutions need too long to redesign their solutions as technology and network demands advance;
Network service providers are requiring more flexible solutions to their technology and network needs for offloading support of new data appliances introduced by the market. A paradigm shift in technology development is required for the delivery of advanced data appliances;
Ethernity has designed, developed and patented a series of system solutions to address these specific needs and is the sole provider of data network offload technologies that can be delivered within a FPGA framework with the same advanced functionality that is currently provided by off the shelf ASIC. Its technology solutions are:
Unique and protected by five U.S. patents
Consumes 80% less die size than legacy networking technology
Significant addressable markets: The Software Defined Network (SDN) market is estimated to reach US$70.41 billion by 2024, according to Grand View Research, Inc. The global Virtualisation of Network Functions (NFV) market (including hardware and software) will be worth US$15 billion by 2020, with software comprising 80 per cent. of that $15 billion, according to IHS Markit;
Strong current product portfolio with increasing design win in wireless, mobile, broadband access and datacenter together with a strong roadmap of patentable new technologies targeting both data centers and global carrier ethernet market;
Established company with a track record of profitable growth and cash generation with an experienced management team; and
The Company has raised £15 million in a significantly oversubscribed placing to strengthen its balance sheet to support sales to Tier 1 network providers.
Operators and telecom equipment manufacturers are finding it increasingly difficult to cope with the evolving network requirements and the ever growing volume of data generated, processed, consumed and stored by end users of all types. Operators and telecom equipment manufacturers need to get the required support for these networking pressures from traditional vendors who rely on ASIC solutions. New ASIC solutions are often prohibitively expensive, have a relatively short lifespan and require extended hardware design time to fabricate the specified networking features. This issue is exacerbated by the need to support the emerging SDN specifications which require flexibility and most importantly programmability.
To overcome limitations of existing infrastructure, operators are pushing towards NFV, a solution that will enable providers to control, manage and reduce boundaries created in the existing generic hardware platforms with software solutions replacing proprietary hardware networking solutions. However, to make it economical and to give operators the ability to support the huge growth in users and data consumption, there is a need for programmable hardware to accelerate the performance of a pure software data path. This acceleration solution, in turn, reduces central processing unit (CPU) load whilst still maintaining the exact same programmability and flexibility and supporting the vision of Network Virtualization.
Ethernity has designed, developed and patented a series of system solutions to address these specific needs within a programmable FPGA framework. Ethernity’s solutions work across network processing points from local loop networks, to data centres, mobile telecommunication requirements to IP traffic and network functioning. Furthermore, as Ethernity’s solutions are designed using an FPGA platform they are to a great extent “future-proofed”, that is they can be updated, upgraded or reprogrammed in-line with future network or infrastructure demands and security requirements.
In response to the forecast increases in data creation, transfer and consumption, operators and manufacturers are developing the Carrier Ethernet and NFV/SDN markets. Both are markets in which the Company has developed solutions to assist operators to improve network efficiency and data transfer.
The SDN market is estimated to reach US$70.41 billion by 2024, according to Grand View Research, Inc. Software defined networking has witnessed a surge in its popularity in the recent years due to the benefits it offers over the existing legacy infrastructure. The SDN solutions provide centralised control and operational capabilities, which help network administrators and engineers respond quickly and efficiently.
The global NFV market (including hardware and software) will be worth US$15 billion by 2020, with software comprising 80 per cent. of that $15 billion, according to IHS Markit.
Reasons for Admission
The Directors believe that Admission will increase the profile and credibility of the Company as it seeks to develop its core markets. Global operators want to deal with long term partners who have the necessary resources to support their products throughout their lifecycle, and who can demonstrate sufficient financial capacity to meet the global network operators volume and delivery requirements.
Consequently, the net proceeds of the Placing, will be used to:
- Strengthen the Company’s balance sheet and capital base to meet Original Equipment Manufacturer financial strength requirements;
- Allow the Company to invest in increased and continued R&D activities to build upon, and continue development of, the Company’s existing product range; and,
- Allow the Company to invest in additional marketing activities, technical standardization groups to increase product awareness and accelerate product uptake.
Total Voting Rights
The total number of Ordinary Shares in the Company in issue immediately following Admission will be 32,518,186 each with equal voting rights. The total voting rights figure can be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify their interest in, or a change of their interest in, the Company under the Disclosure, Guidance and Transparency Rules of the Financial Conduct Authority.
David Levi, CEO of Ethernity Networks, commented:
“We are delighted to be admitting to AIM today and that we had such a positive response to the fundraising from new investors. The fundraising and AIM listing is a major moment for Ethernity that will put the business on a greater trajectory and address an exponentially growing market. We have game changing technology that major global network operators are demanding and the listing will enhance Ethernity’s profile and strengthen our balance sheet, which is essential in order for us to fulfil tier one supply chain requirements.
The significant oversubscription demonstrates investors’ confidence in our strategy, technology and management team. With a strong board and a track record of profitability and revenue growth we feel we are extremely well placed to take advantage of the opportunities that now present themselves to us as a public company and we look forward to updating our new shareholders on our progress in due course.”
The Company’s Admission Document can be viewed at: www.ethernitynet.com. Copies of the Admission Document will be available at the registered office of the Company, subject to applicable securities laws or regulations.