Surface Transforms, which manufactures next-generation carbon ceramic brake discs for the automotive and aircraft industries, has raised GBP20 million in a financing round led by Zeus Capital.
The raise follows a successful 18 months for Surface Transforms, in which it has secured contracts to supply brake discs for five new vehicles by four major automotive manufacturers, providing an expected revenue pipeline of GBP43 million. The company is also increasingly confident of securing at least two new contracts in the near future.
Based in Knowsley, Liverpool, Surface Transforms will use the funds raised to construct a new production cell at its 55,000 sq ft manufacturing facility, enabling it to fulfil demand from new and existing customers. It will also use the funds to improve machinery at its existing production cell and invest in working capital, giving the manufacturer the flexibility to respond to new opportunities and requirements quickly.
With manufacturers including Audi, BMW, Jaguar, Nissan and Volkswagen now offering carbon ceramic brake discs on selected vehicles, the market is set for major growth. Surface Transforms estimate the target market to be worth approximately GBP2 billion and is subject to multiple drivers including technological and environmental benefits compared to traditional iron discs, and the desire of automotive manufacturers to increase competition in a market that is currently dominated by SGL Brembo.
David Bundred, Non-Executive Chairman of Surface Transforms, says: “This funding will enable the Company to move to the next stage of its development – the building of OEM Production Cell Two will provide revenue capacity of GBP35 million at Knowsley from 2022, and enabling us to fulfil contracts we are confident of being awarded in the near future.”
Kevin Johnson, Chief Executive Officer of Surface Transforms, adds: “This decision to invest ahead of contract award reflects both our confidence in the strength of our pipeline – and our realisation that the new disruptive OEMs operate to different timescales than our other customers. The automotive industry is changing with electric vehicles central to this, and we are delighted to be a part of it.”
A team at Zeus Capital comprising David Foreman, Dan Bate, Jordan Warburton, Dominic King, Rob Byde and James Edis, acted as nominated adviser and joint bookrunner to Surface Transforms. Since 2013, Zeus Capital has acted on over 160 transactions valued in excess of GBP10 billion, specialising in advising small and mid-cap private and public companies.
David Foreman, Director, Corporate Finance at Zeus Capital, says: “We are proud to have acted as nominated adviser and joint bookrunner for this raise by Surface Transforms, as they consolidate their position in the market. Zeus Capital has guided Surface Transforms through an incredibly popular raise, and we look forward to watching the business go from strength to strength.”
