14 September 2021

Spotlight on Alvant Group plc

Learning is at the heart of our activities at LGB.

During September we successfully closed an EIS-qualifying fundraise for Alvant Group plc, the aluminium matrix composite (AMC) engineering company, with both existing and new investors participating. Alvant creates a range of products aimed at providing lighter, stronger, more sustainable solutions with increased performance. We first raised funds for Alvant ten years ago. At the time, the company was aiming to provide structural components to the automotive and aviation sectors, working on projects with Global OEMs which were partly funded by Innovate UK. Although these projects met or surpassed their engineering targets, the company was not able to establish a sustainable business model given the long technology adoption timelines in these sectors. When both Alvant and its strategic partners were buffeted by Brexit and more recently the pandemic, Andrew Boyle advised current management to undertake a fundamental review of its business structure and strategy. As a result, the Board refocussed the business with the ambition of being the enabler of the next generation of electric machines. In this application, the company could offer the ability to control heat as well as light-weighting and strength. Projects relating to aircraft landing gear and automotive suspension components would only be advanced on a fully-funded basis.

Through our own continuous development programme delivered by leadership coach Ben Wales, the LGB Investments team has been able to assess Alvant in a different light using analytical processes. One of these involves the concept of Value Disciplines, which appeared in a recent edition of The Harvard Business Review.

The Value Disciplines

The Value Disciplines model is a business framework that looks at the three competitive areas a company needs to focus on in order to be successful. These disciplines are customer intimacy, product leadership and operational excellence. In order to achieve its full potential and become successful, a company must do well in all three areas and become excellent in at least one of them. We believe that in Alvant’s case, the company has addressed all three disciplines during its restructuring. Today, the company is particularly strong in customer intimacy and product leadership. This is because it has stopped trying to respond to all enquiries and has become an IP hub for strategic partners willing to invest funds and resources in commercial projects.

i) Customer Intimacy – Before Brexit and the pandemic, Alvant was chasing six very different segments from aero-engine manufacturers to consumer electronics companies to engineering conglomerates, etc. The company was not focused on either customer loyalty or customers' lifetime value but merely on being associated with prominent counterparties that could add credibility to its technology. Today, Alvant has re-invented its route to market model through developing new industrial and commercial partnerships with companies such as 3M and Nidec (the world’s leading electric motor manufacturer). It now has three MOUs signed and is in advanced discussions with a Strategic Product Partner.

 ii) Product Leadership –  Alvant totally changed its approach from R&D to products with a commercial pathway. Previously the company was perceived as a materials company with its aluminium matrix composite, with OEMs being required to identify commercial applications. Now Alvant has a focused product with the rotor sleeve which has real performance benefits for the electric motor. Alvant in its new structure can be creative which means: 

  1. Recognising and embracing ideas that may originate outside the company,
  2. Commercialising these ideas quickly, and
  3. Relentlessly pursuing new solutions to the problems that their own latest product has just solved.

iii) Operational Excellence – Alvant has developed a three-phased model to bring its products to market whilst keeping operational costs under control:

  1. Product development and IP protection,
  2. Low-volume production carried out in-house, and
  3. High-volume production with a Tier 1 manufacturing partner under licence.

The reduced costs and complexity of its operations enable the company to focus on Customer Intimacy and Product Leadership. As noted above, to be successful, a company needs to be outstanding in only one area.

In summary – Alvant has a new product model which is focused on providing solutions for rapidly evolving  markets, it has a new operational model of creating partnerships and outsourcing the manufacturing. This has significantly reduced the capital required to build the company. Finally, it has a new customer intimacy model through implementing its partnership programme, which is gaining significant traction.

We have been delighted with the results from our newfound analytical process and feel confident that Alvant is on the right path to a brighter future. The current fundraise is still open for new investors and is EIS-qualifying.

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