IP Group PLC (Ticker Symbol: IPO) is a British private equity and venture capital firm specialising in the commercialisation of intellectual property. The company incorporated in the year 2001 by David Norwood and Alan Aubrey; headquartered in London, United Kingdom. The company share listed on the Alternative Investment Market in 2003 and, in 2006, the company achieved a full listing on London Stock Exchange. The company specializes in seed, early stage, startup and late-stage investments in life sciences, healthcare, cleantech, intellectual property, pharmaceuticals and biotechnology.
The company grants seed capital to convert business ideas from universities into companies and assists its partner universities’ intellectual property commercialisation activities, with the aim of taking an equity position in them. The company achieves this by aiding in creating, building and supporting exceptional intellectual property-based companies. The company is a part of the FTSE 250 index.
- Alan Aubrey – Chief Executive Officer
- David Baynes – Chief Operating Officer
- Greg Smith – Chief Financial Officer
- Mike Townend – Chief Investment Officer
The company’s business segments are commercialisation of intellectual property via partnerships with universities, venture capital fund management and in-licensing of intellectual property. The university partnership segment is engaged in the commercialisation of intellectual property through the creation of partnerships with universities. Venture capital fund management engages in the management of venture funds with a focus on the UK’s early-stage technology startups. In-licensing segment is focused on in-licensing of intellectual property from universities. The total portfolio value is around £1.2 billion which includes equity position in more than 150 companies and has access to 16.8 per cent of the world’s top research.
The group now operates in three major geographic locations: The United Kingdom, which remains its primary market, the United States of America and Australasia. The company has a partnership with 32 universities or institutions all over the world consisting of:
- 18 in the UK, including the University of Cambridge, Imperial College, London, University of Oxford, and many more;
- 6 in the USA, including Columbia University, University of Pennsylvania, Princeton University, and many more;
- 9 in Australasia, including the University of Melbourne, University of Auckland, Australian National University, and many more.
Portfolio Overview (1HFY 2018, £m)
(Source: Company Fillings)
Key Portfolio Highlights (1H FY18)
- The net portfolio gains in the six months ended 30th June 2018 were £0.7 million against £28.7 million reported last year (1H FY17). Net portfolio gains reported in the previous financial year 2017 (FY 2017) were £94.2 million.
- The fair value of the portfolio in 1H FY18 was £1,163.7 million as compared to £663.0 million reported last year (HY 2017).
- Capital worth about £46.9 million was provided to the portfolio companies, against £20.1 million which was provided in the 1H FY17. The total capital infusion was £2 million in FY 2017.
- Oxford Nanopore Technologies completed a significant funding round worth £100.0 million.
- Microbiotica entered into a collaboration with Genentech, in a deal worth up to $534.0 million.
- The strategic collaboration agreement was signed between Ceres Power and China’s Weichai Power for product development, launch and equity infusion.
Key Financial Metrics (1H FY18)
(Source: Company Fillings)
Key Financial Highlights (1H FY18)
- The loss reported in the first half of the financial year 2018 was £21.6 million against a profit of £16.7 million reported last year (1H FY 2017).
- At the end of June 2018, net assets reported were £1,489.8 million against £966.4 million reported last year. In FY 2017, total net assets reported were £1,508.5 million.
- Hard NAV was worth £1,298.5 million at the end of June 2018 against £898.0 million reported last year (1H FY 2017).
- As on 30th June 2018, gross cash and deposits reported were £258.5 million, against £263.1 million reported last year.
(Source: Thomson Reuters)
- The profitability margins of the company have deteriorated in the last reporting period as the company reported a loss.
- The liquidity position, as compared to industry, is significantly better. However, from the last 2 years, the current ratio is suppressing.
- The company’s debt-equity ratio (leverage) is on a lower end as compared to the industry median, reflecting debt funding is nominal as compared to equity funding.
Share Price Performance
(Source: London Stock Exchange)
Share Price Commentary
- On 15th February 2019, IPO share closed at GBp 106.2, up by 3.31 per cent from its previous day closing price. Stock’s 52 weeks High and Low is GBp 145.60/GBp 99.80. At the closing price, the stock was trading 27.06 per cent lower than its 52w High and 6.41 per cent higher than its 52w low. The company stock beta was 0.93, reflecting less volatility as compared to the benchmark index. Total outstanding market capitalization was around £1.12 billion.
Risks Assessment and Growth Prospects
- The business portfolio is well diversified with exciting opportunities and new milestones to be achieved in the next six to twelve months.
- The company fundamentals and business performance are strong with £258.5 million of gross cash and deposits as reported in 1H FY18.
- Macroeconomic situations can adversely affect the company’s ability to achieve its targets, including reduced investment opportunities.
- A potential decrease in the market value of the portfolio can drastically reduce the fair value, impacting the financials.