Apple buys NZ’s PowerbyProxi

PowerbyProxi CEO and major shareholder Fady Mishriki (right) with long-time MD Greg Cross, who departed before the news

Apple has bought Auckland wireless recharging company PowerbyProxi for an undisclosed sum.

Apple Australia-New Zealand spokesman Alex Wadron confirms the sale, and that Apple wants to keep the business in New Zealand, but says his company will be making no further comment.

At this point, the Companies Office still lists Movac as the largest shareholder on 20%, followed by chief executive Fady Mishriki (18%), US company TE Connectivity (11%; TE Connectivity paid $US5 million for its stake.), NBR Rich Lister John Holdsworth (11%) a consortium of investors including Rich Lister Phil McCaw (10%) and Samsung 10%. Smaller investors include The Icehouse and Ice Angels (both 1%).

PowerbyProxi was born out of Uniservices, the commercialisation arm of Auckland University, which is listed with a 3% stake.

Samsung paid $US4 million for its 10% stake back in 2013, indicating the sale price could be north of $US40 million ($NZ55 million). Given Apple's cash on hand is larger than NZ's GDP, the sale price could have been 10 times that without triggering material disclosure.

PowerbyProxi, formed in 2007, holds 350 patents covering technologies for wirelessly transferring power between manufacturing equipment and the likes of wind turbine components and, at the consumer end of the scale, for wirelessly recharging phones – a feature Apple introduced with its latest models (Samsung featured wireless charging with its Galaxy S6 released in 2015, though not sourced from a PowerbyProxi licensee. The Kiwi company did take heart that Samsung adopted the Qi wireless charging standard that it backs over a rival standard, however).

The company was still at a very early stage in terms of collecting revenue, with a focus on licensing its technology rather than selling its own products. Early licensees include US giant Texas Instruments.

PowerbyProxi received at least one grant from Callaghan Innovation, with indications it qualified for up to $15 million in matching R&D funds over a three year period. The grant was in 2014, making it likely outside Callaghan's three-year clawback period in the event of a sale. In any event, the taxpayer-subsidised intellectual property is now owned by Apple.


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The interesting thing is how do the investment community define "success". An exit yes and welldone for that. but the real definition of success if the $s recieved and the return generated being more than the risk taken.

Of course this information will not be disclosed.

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That is very rich. Chris was the king of backslapping of the tech IPO boom of 2014 - which ended in a terrible bust. Own up to it chris

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Agree but we need Calaghan to refine its model and get a more equitable return for its investment - not just grants. That way Callaghan can redistribute funding and build a bigger pie for NZ innovation

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Well said.

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So socialism only benefited the private owners who got to sell - no return back to NZ for the support given?

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Every business that hires people pay PAYE (on behalf of their work force), but not every business gets massive handouts. BTW most of the people working at companies such as this one would if not working for them be working for someone else so zero sum gained.

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Interesting to see one of the original founders - Greg Cross not listed as a shareholder, may have put his equity into one of the other vehicles, or exited earlier.

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Greg did a huge amount for this business and I hope he got to share in the spoils.

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Well done to the team, Uniservices and investors. Hopefully this means an Apple presence in NZ that can be expanded.

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Well done to the private business people who are in business to make money. Fair dues

However it hardly gives anyone any confidence in the NZ tech space etc. Over the 10 year period that Powerby Proxy has been around the taxpayer has dished out literally billions of dollars. When something good actually comes out of it they sell the IP lock stock and barrel to a foreign company who pays zero tax in NZ. The 'eco-syestem' is toxic, created to benefit a very few

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Billions? Not to one company of course.

In this instance Uniservices have said they are "very happy" about their return - sadly they are bound by confidentiality beyond that. As the entity that looked after the very early placement of government money (through or on behalf of Auckland University) if they are happy then great returns are being made for that early government investment.

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What total BS. Uniservices can publicly say they are happy, that does not mean that got a "great return". Because they are not going to come out and say one of the "stars" in their portfolio returned stuff all are they. It may also be relative to everything else they have invested in, it might just be a less s**t return than the rest.

Just have a look at Powerhouse Ventures - they were making great returns according to them and their valuation methodology - unfortunatley the investment market things otherwise.

As for not making the return public - again BS, can you tell me if they came out and said they made an Internal Rate of Return of x% how that would disclose any information at all on what the deal with Apple was?

To get that answer someone would have to know when Uniservices invested and how much, at every point in time.

Confidentiality is an excuse to not be transparent about things.

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Conflating PVL with Uniserivces is unfair. Uniservices is profitable, growing and has a track record of success recorded in cash.

https://www.kiwinet.org.nz/files/Investment/Historic-PreSeed-Report.pdf
Page 32 covers Power by Proxy, showing $200,000 in Pre Seed Accelerator Fund (PSAF) funding along with $400,000 from UniServices in 2004.

https://www.callaghaninnovation.govt.nz/grants/grant-recipients - search for "powerby" shows $1.3m in grants plus a 20% of R&D growth grant commencing in 2014.

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Most of Uniservices revenues and profits come from contracting R&D services from the University to third parties. This is not from commercialisation of IP etc.

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So Uniservices invested $600k into the company, in exchange they now have just over 3% shareholding.

To recover their investment would mean the company had to be sold for $20m (feasible from the above article). But this gives them a 0% return, and probably does not factor into account non-cash items. Support of Uniservices people the original IP value etc.

10 x is often the benchmark / passmark for a good (not great) VC investment so that would mean a sales price of $200m - possible but less likely.

A great return is probably more in the $500m + camp in my view.

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Scuttlebutt* is that it's over $200m - so yes, this would be a good return.

*Completely uninformed. My guesstimate would be $250-400m, but depends on whether PbP was infringing on IP owned by Apple, which would push the value down.

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That would be a huge premium on the $A4 million that Samsung paid for its 10% stake -- especially considering there's a half-dozen companies in this space.

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Maybe you could run a poll as to what we all guess the sale price was. Only then can we accurately measure their relative performance against the median guess.

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If $200 then a good return cash invested.

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Movac have confirmed their dominance as the best investor in this space by a country mile

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Yes billions over 10 years. Grants to companies and the cost to administer. This figure is likely to be about 5 Billion over the 10 years. 500m per year

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These are assertions not facts. The facts are out there and we'd welcome them as part of the conversation

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An absolutely excellent outcome, for one the investors are rewarded and the rest of the world see that leading edge Technology comes out of NZ. This will help others trying their damn hardest to increase the exports of high tech from NZ Inc.

The fact that one of the global leaders in this space has latched on to PBP will make others take a harder look at NZ tech exports, whether it be product, licenses, JV's, capital raises and people outside of NZ looking to come here with their intellectual horse power will see NZ Tech as a good location (assuming the new Govt will let them in).

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Total BS, you can only look at this as a failure for everyone except the private business people involved.

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What about Kunal who only has 1% of the shares compared to Fady's almost 20%? Wonder how that happened.

http://www.velocity.auckland.ac.nz/success-stories/alumni/id/11/fady-mis...
What started out as a 4th year University of Auckland Engineering project by Fady Mishriki and Kunal Bhargava has become PowerbyProxi, a ground-breaking technology company commanding attention from some of the world’s electronics giants.

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I presume that Apple acquiring wireless charging patents is a good insurance policy for them as wireless charging becomes more mainstream in their products.

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This corporate welfare needs to stop immediately and I hope the new Government steps in quickly to put a stop to it. It is entirely wrong for the tax payer to be subsidising these start ups and other unprofitable businesses only for them to eventually be sold offshore with no return to NZ Inc. It's not the role of the NZ taxpayer to be making a select few often already wealthy individuals even richer. It's just plain wrong, as is subsidising the profits of huge and powerful foreign multinationals who pick these companies up for a song and then transfer all the potential back to their home countries.

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Complaining about government funding R&D and growth is normally aimed at companies that fail, rather than sell for a bomb to Apple. Much of the money will be recycled back int the ecosystem.

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You are so blinded and entrenched in this ecosystem you simply don't get it Lance

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The high tech ecosystem is growing quickly and generating tremendous returns for founders, investors and staff - as well as the government.
Heck we (at PFL) even had our own announcement of a sale of a company to an offshore buyer yesterday, which was all of the above.

So I'm very happy to be inside this ecosystem, which the TIN folks reported exceeded $10 billion in revenue last year. The key here is that the $10 billion can easily double or triple in a relatively short while - which is much harder for cow or real estate based businesses.

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The most representative portfolio of early stage / tech investment is NZVIF, this is not providing tremendous returns to investors. Their returns are public and they are pathetic to say the least.

BTW if the eco-system is creating such value for founders, investors etc why does the government continue to subsidise it. time for them to stop or at least get the same returns as the investors in my view.

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It takes 7 years for an average start up to exit or get reasonably profitable. So NZVIF portfolio performance can not be assessed now. They have some good holdings

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NZVIF has been operating for 15 years so plenty of time to have delivered results. It is easy to say it is too early I have heard that story for 10 years. It is always easy to say they have some good companies in the portfolio. But they normally change overtime because last year's good companies turn bad.

For example when Powerhouse was raising money they profiled 4 or 5 companies.

Hydroworks - dead
Motion and Solar bright - largely written off
Croplogic - lost about 50% since listing.
Invert Robotics - no value shift in 2+ years.

Add in the likes of Martin Jet pack, Rexbionics, etc. The so called stars seem to regularly fade away.

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If it is creating so much money it can stand on its own 2 feet

The taxpayer has spent 100s of thousands on Linewize and what do they get back? Is the new Australian owner going to pay the grants back??

Also from what I can read the deal is just for script in another loss making company with a lot of share tie ups. (except for Puna funds shares)

Puna only has an option to sell these shares at 50c, so this translates to a negative real return

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Its easy to double or triple if you change what tech actually is. Its actually a tint industry if you exclude manufacturers

Anyway - Family Zone lost 9million dollars last year on a turn over of less than 2million. There is a very good reason why your deal is only in script

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The problem is NZ gets to keep the duds and sells the successful ones so we don't get a reasonable return on investment.

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Everyone is forgetting the fact that Apple doesnt pay tax in New Zealand

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Check the OIO to see if over 100m in assets?

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Why is there such a backlash against someone cashing out after slogging it out for a decade? This company would never have made a profit if it remained in NZ control. All of the NZ-led effort that had gone into IP generation and protection up until now would have been for nothing without an ultimate acquirer.

If you’re getting upset about the use of R&D grants, ask yourself - do we expect recipients of the home start grants to pay them back if they sell the house after 3 years? Do we expect negatively geared landlords to repay the tax losses claimed against personal income if they sell the rental to a foreigner? No.

It’s all welfare. At least in the case of R&D grants you can argue it’s being used to keep relatively highly paid roles in NZ as opposed to being channeled into propping up the housing market.

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If all the billions of dollars dished out via corporate welfare in NZ will ultimately lead to nothing as you say. It really is time to shut Callaghan down

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Welfare is welfare. I want to hear you shout equally as loud for the cessation of individuals offsetting tax losses from rentals against their personal incomes. I want to see you being just as vocal about means-testing superannuation.

I'll repeat the message (since you seem to have missed it) at least in the case of R&D grants you can argue [welfare is] being used to keep relatively high paid roles in NZ.

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Subsidizing wages is not a good enough reason. It means that people are being overpaid for the value they provide

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Can I have "what is working for families" for $100, Alex?

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You are absolutely right - it is a blight on our economy that this is required. But it is targeted universally at those at a low income level, it is not targeted at say those working in a specific role or function. Why subsidies R&D but not marketing when it is all about the sales etc.

Why not subsidies doctors etc - they are high paid and we can keep those jobs in NZ.

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Sure. There are myriad ways this money could be better directed. The point I’m trying to make is that, unlike many other forms of welfare in this country (such as universal superannuation), these grants do have positive flow-on effects for the country. I just think it’s hypocritical for commenters to get carried away with their opposition to R&D grants when we pump much more money into superannuation, for example. But you won’t hear many people admit that. In fact, you’re more likely to hear “but I paid my taxes, I’ve earned it” - a line of reasoning that is so fallacy-ridden it’s insulting.

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