Rand Capital Sells Innov-X Systems Securities

Rand Capital Corp. has sold its securities in Innov-X Systems Inc. less than three weeks after its acquisition by Waltham, Mass.-based Olympus NDTCorp.

Rand has funneled money to Innov-X for five years, marking its first transaction in 2004 and making three additional investments in the form of debt and equity through 2009. In a news release, Rand officials said the sale of Innov-X could generate as much as $5.6 million for the Buffalo, N.Y.-based firm.

“Since the time of our intial investment, Innov-X has increased its employment base and revenues, which are two important financial metrics and goals of the Small Business Investment Company program through which we receive our funding,” said Daniel Penberthy, Rand’s executive vice president. “As Innov-X grew and achieved critical milestones in its business, Rand and its venture financing partners, Summit Partners [Boston,Mass.] and CEIVentures Inc. [Portland,Me.] were able to finance its growth.”

Rand valued its Innov-X securities at $5.5 million on March 31. Executives said the company will receive about $4.4 million from the sale during the third quarter of 2010.

The sale of Innov-X securities came just 18 days after the firm’s July 1 purchase by Olympus NDT. At the time of the purchase, Olympus officials said they planned to make Innov-X a subsidiary of the firm. Olympus NDTdevelops and manufactures X-ray fluorescence analyzers for determining the elemental make-up of substances.

“We were pleased with our exit from Innov-X Systems Inc.,” said AllenF.Grum, Rand Capital president. “This was the largest exit from Rand Capital Small Business Investment Company and had an IRR in excess of 80 percent.”