A Norwegian technology company, founded in 1996 to pioneer miniaturised fingerprint sensors. The company aims to provide consumers with a secure and user-friendly use of personal identification by developing and commercialising fingerprint imaging, recognition and authentication technology.

Idex joined the Woodford Equity Income Fund and Woodford Patient Capital Trust portfolios in May 2015, but our interest in the company predates this investment by several years.

Investment case summary

The investment case initially revolved around the opportunity that Idex had to deploy its technology in three areas: mobile phones, credit cards and more broadly in the ‘internet of everything’. Although the first of these opportunities has now narrowed, Idex has made considerable progress with its technology in the global payment card market. Here it has a clear technology lead, a certified product, and is well-positioned through a strategic relationship with Mastercard. Technological developments have been positive in a market which is now seeing increasing adoption of off-chip fingerprint sensors in payment cards.

Further out, as the world becomes ever more dependent on technology, there is a significant opportunity for biometric solutions to be increasingly used in the ‘internet of everything’. The company benefits from an experienced management team with a breadth of expertise in the technology sector, and its innovative technology is well-protected by a robust intellectual property portfolio. We are therefore confident that Idex is very well-positioned for significant long-term expansion – growth that will be very rewarding for its shareholders.

Ask a question about our investment in Idex

Fund exposure
Equity Income Fund 0.87%
Patient Capital Trust 1.33%

As at 31 March 2019

Geography Norway
Industry Technology
Themes Disruptive technology

Source: Woodford


Fundraising and new partnership

Following the fundraising announced yesterday, Idex has today announced a major new partnering agreement. Yesterday, the company announced it had raised $25m in a private placing, in which we have participated. This should remove a key concern in the market regarding future funding requirements.

This morning Idex has announced it is partnering with Goldpac to introduce dual-interface (contactless) biometric smart cards in China and beyond. Goldpac is one of the five largest card integrators globally, with a strong presence in China and has explicitly stated that it is “looking forward to deploying biometric smart cards in 2019”. Multiple pilots have been signed and are currently underway, but we are still waiting to see the actual order build and formal launches take place. We have been conservative on ramp up expectations, pricing and margins, but this partnership builds confidence in management’s thesis that volumes will ramp significantly in the second half of 2019.

This is a critical year for Idex – if it executes well, it should lead to significant value growth. The share price has reacted positively to these developments and is currently trading marginally above the placing price of NOK4.00 per share.

Paul Lamacraft
31 January 2019

Another new partnership

Another very positive announcement from Idex today, this time in the form of a new partnership with XH Smart Tech, one of the top five Chinese smart card vendors. Idex has received an initial order for its dual-interface sensor by XH Smart Tech to commence integration.

This is the first major announcement of orders for the contact-less solution which could be game-changing for Idex and for the payment cards industry. In our view, the announcement should continue to drive positive sentiment towards the stock and further validates the opportunity that lies ahead of the company.

Paul Lamacraft
31 October 2018

More positive news

The company has announced today that it has partnered with Hengbao, which is one of the biggest card companies in China, covering the banking, telecommunications and security sectors. The goal of this partnership is to introduce contact-based biometric smart cards across Asia, with future plans to trial contactless biometric cards as well.

Asia represents a huge market opportunity for Idex – the total amount of smart payment cards in Asia in 2017 was 1.3bn and this is expected to rise to 1.8bn by 2022. Importantly, Hengbao supports cards for multiple payment networks, including Mastercard, China Union Pay, VISA and Japan Credit Bureau (JCB) credit card. This makes for a wide and exciting card payment platform for Idex to explore with its innovative biometric technology.

In our view, this is another excellent partnership signed by Idex. We are very pleased with how its CEO, Stan Swearingen, is driving the business forward – the commercial opportunity for the company is substantial and we view the continuous flow of partnerships and deals as clear confirmation for the quality of Idex’s technology. Looking ahead, we await news of contactless trials to be announced.

Paul Lamacraft
21 September 2018

Important milestone

Today, we’ve received excellent news from Idex – the company has achieved a world-first by receiving a production order for biometric fingerprint sensors for payment cards. Idex is now expecting to start shipping the sensors in the remainder of 2018. Although the strategic partner which placed the order remains unnamed, it has confirmed that it has completed several end-user trials for biometric cards, receiving positive feedback on the convenience, security and ease of use. Therefore, in our view, this is a key milestone for Idex – it demonstrates that years of development are now beginning to bear fruit and it strongly validates the company’s technology.

Our analysis suggests that the market for biometric cards has significant momentum and is attracting strong interest from both consumers and card issuers. Idex is working with a range of clients who are integrating its finger print sensors and biometric technologies into both contact-based and contactless cards. Therefore, while this is clearly the first order, we expect more to follow as biometric cards grow in prominence around the world.

Paul Lamacraft
17 September 2018

Positive steps

Another positive announcement from Idex this morning. Its fingerprint sensors are now being deployed in biometric smart cards launched by a bank in the Middle East. This customer launch is yet another indication of the significant interest in biometrics in the smart cards for payments industry, due to the enhanced security and increased confidence in transactions that they provide. We expect to see many more of these announcements come through in the coming months as customer trials complete and orders get placed for full-scale roll-out.

This follows news earlier in the month that Idex’s contact-based card solution had been certified by a large global payment provider, which represents an important development milestone. Additionally, the company announced that its technology had been successfully integrated into dual-interface biometric cards by Feitian, a leading provider of user authentication and transaction security, and Jinco Universal, a leading smart card integration pioneer.

All of these announcements demonstrate the increasing momentum behind Idex’s contact-based card solution. The commercial demand for this technology is becoming increasingly clear but the opportunity for Idex’s “contact-less” solution, which is currently in development, is potentially even more significant. We expect positive news flow to continue to build through the rest of this year and into 2019.

Paul Lamacraft
27 July 2018

Technological progress

A positive update from Idex earlier this week, confirming that it has been working closely with Mastercard on the development of the “remote self-enrolment solution” for its biometric payment cards. This development enables convenient enrolment for biometric cards which will assist in large scale, mass market deployment. Mastercard made the announcement at the same time, highlighting this progress, as it continues to be viewed as a technology leader in the payments market. The ability to offer a solution that does not require branch based enrolment and needs no new infrastructure to deploy is a significant milestone in enabling the deployment of biometric cards at significant scale. The solution can be used with both contact and contact-less biometric cards.

This is a significant development, in our view, with Idex making demonstrably positive progress with its technology. The announcement from Mastercard clearly demonstrates its intentions and provides further evidence of the closeness of the relationship between the two companies.

Paul Lamacraft
3 May 2018

Woodford Investment Management Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 745433). Incorporated in England and Wales, company number 10118169. Registered address 9400 Garsington Road, Oxford OX4 2HN.

Woodford Patient Capital Trust plc is incorporated in England and Wales, company number 09405653. Registered as an investment company under section 833 of the Companies Act 2006. Registered address Beaufort House, 51 New North Road, Exeter, EX4 4EP.

© 2019 Woodford Investment Management Ltd.
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