IP Group performs well in first half, ups offer for Touchstone

Intellectual property-based business developer IP Group saw its net assets grow to £968.1m in its first half, it reported on Tuesday, from £748.5m year-on-year, while its hard net asset value was firmer at £890.5m, from £683.5m 12 months earlier.

The FTSE 250 company saw a return on hard net asset value of £21.3m in the six months to 30 June, compares to a loss of £30.6m in the first half of 2016, and it reported gross cash and deposits of £263.1m at period end, compared to £174.7m a year earlier, including £180.3m of capital raise net proceeds settled during the period.

“IP Group has a strong balance sheet, with net assets now approaching £1bn, a diverse portfolio comprising a broad range of early to mature businesses across four sectors and we believe the fundamentals of the business are strong,” said chief executive Alan Aubrey.

On the corporate front, IP Group announced a £207m capital raise during the half, which included “significant” new shareholders from Australia, China, Singapore and the UK.

It launched IP Group Australasia, with nine new university partnership agreements signed with universities in both Australia and New Zealand, and it completed the acquisition of Parkwalk Advisors.

The company also confirmed its firm intention to make an all-share offer for Touchstone Innovations, announcing an “improved offer” for the firm in a separate announcement on Tuesday morning.

“In the first half, we were also delighted to announce a £207m capital raising, the expansion of our business into Australasia, a firm intention to make an all-share offer for a combination with Touchstone Innovations plc and the completion of our acquisition of Parkwalk Advisors Ltd,” Aubrey added.

“The formal documents in connection with our offer for Touchstone Innovations plc are expected to be posted today.”

Looking at its portfolio, IP Group’s fair value was £663m, up from £525.7m year-on-year, with a net change in the fair value of its portfolio being an uplift of £28.5m, compared to a £24.5m decrease at the same time last year.

A total of £20.1m of capital was provided to portfolio companies and projects, compared to £12.8m a year ago, with the company confirming significant funding rounds by Ultrahaptics Holdings of £17.9m, Actual Experience of £17.5m and Creavo Medical Technologies of £13.4m.

“The underlying performance of the group and its portfolio companies in the first half of 2017 has been strong with a net portfolio fair value increase of £28.5m,” Alan Aubrey continued.

“It has been particularly encouraging that a number of our private companies including Ultrahaptics and, more recently, Creavo, have successfully completed large fundraisings following significant commercial progress, attracting new investors to their registers.”

Improved offer for Touchstone

In a separate announcement to the market on Tuesday, IP Group confirmed the details of its “improved offer” for Touchstone Innovations.

It said that, under the terms of the improved offer, each Touchstone shareholder would be entitled to receive 2.2178 new IP Group shares for each Touchstone share.

Based on the closing price of 137p per IP Group share on 17 July, the new exchange ratio valued each Touchstone share at 304p.

IP Group also confirmed it had received a non-binding letter of intent from Imperial College in favour of the improved offer, which represented approximately 15.3% of Touchstone’s issued share capital.

Following that, IP Group had now received support for the improved offer from Touchstone shareholders representing 89.7% of Touchstone’s issued share capital.

“We welcome Imperial College's support and remain confident that the enlarged Group will be well placed to build significant shareholder value as we create an international leader in IP commercialisation,” Alan Aubrey said in that separate announcement.