IP Group gobbles up Parkwalk for £10m

Developer of intellectual property-based businesses IP Group announced on Friday that it has agreed to acquire Parkwalk Advisors, the UK's leading university spin-out focused EIS fund manager, for an initial consideration of £10m.

The FTSE 250 company said Parkwalk, founded in 2009, is the largest EIS growth fund manager focused on university spin-outs, having raised over £100m to date with the majority of funds coming from leading private wealth platforms and having backed over 60 companies across its managed funds since inception.

In 2016, Parkwalk committed over £40m to UK university spin-outs and has been a long-term co-investment partner of IP Group, having co-invested over £17m in 14 investment rounds during 2015/2016.

Parkwalk is a profitable business and the board said it will be immediately accretive to IP Group's operating results.

IP Group’s board said Parkwalk has “significant” assets under management, an experienced team and strong links to many of IP Group's existing university partners.

Its investment vehicles include the evergreen Parkwalk Opportunities Fund, the University of Cambridge Enterprise Funds, the University of Oxford Innovation Funds and the University of Bristol Enterprise Funds.

Parkwalk will retain its existing investment team and investment decision-making independence post-acquisition.

“Parkwalk is a great strategic fit for IP Group being the market leader in the sector with fast growing assets under management run by an experienced team with an excellent track record,” said chief executive Alan Aubrey.

“The acquisition reinforces IP Group's access to a diversified pool of capital for co-funding the earlier stages of the portfolio while providing a profitable and growing platform to develop closer links with institutional investment platforms.

“We consider EIS funds to be an increasingly important source of financing for early-stage technology companies and believe Parkwalk's strong links to leading institutional wealth managers and university partners will be beneficial to the group.”

Alastair Kilgour, co-founder of Parkwalk, said the acquisition gives his company’s underlying investors the security of being part of a larger organisation which also brings with it specialist resources and expertise around developing businesses formed around hard science.

“The strength of IP Group will allow Parkwalk to expand and enhance its EIS fund offerings, helping to boost the UK technology base and returns to investors.”

The total maximum consideration payable for Parkwalk by IP Group is £20m over a three-year period, with the initial consideration comprising £5.0m payable in cash, £2.5m payable in the form of newly-issued IP Group ordinary shares and £2.5m of cash payable in two equal tranches over two years, subject to certain conditions.

IP Group said the remaining £10m consideration is payable as £5m in cash and £5m in IP Group ordinary shares over a three-year period, subject to Parkwalk achieving certain business performance targets.