IP Group preparing for first divi as portfolio progress continues

The FTSE 250 company, which was holding its annual general meeting, said it remained “well-financed” and, as at 31 May, had gross cash and deposits of £228.7m, down from £270.3m at the end of the 2020 financial year, and net cash of £169.1m, down from £203m at year-end.

“As described in the 2020 full year results release, the board considers that IP Group shareholder returns will continue to be driven primarily by long-term capital appreciation,” the directors said in their statement.

“The board also considers that the business model has reached a sufficient stage of maturity that a modest but growing dividend should form a small part of the overall shareholder value proposition.”

Consistent with this approach, and assuming approval of the relevant resolutions at the group's AGM later today, IP Group’s board said it would pay its inaugural dividend of 1p per share on 16 June.

It said £10.1m of the dividend would be settled in cash, and £0.5m via the issue of new ordinary shares under its scrip programme.

“The board also anticipates receiving shareholder approval to renew the authority to purchase up to 10% of the ordinary shares in issue from the date of grant of the authority to the date of the annual general meeting in 2022.

“Such purchases will only be made at a discount to the prevailing hard net asset value per share.

“Any decision to repurchase shares would be undertaken in light of other potential capital investment opportunities for the benefit of stakeholders and remains subject to regular review.”

Looking at its portfolio, IP Group said it had holdings in 40 “focus” companies across life sciences, ‘deeptech’ and ‘cleantech’, representing over 84% of its portfolio value as at 31 December.

In the year to date, the firm said it had invested more than £50m in 32 portfolio companies, and made cash realisations of £16m.

The directors said they expected cash realisations in the first half to exceed £80m, following the completion of certain portfolio transactions.

“Management is currently undertaking its regular fair value assessment exercise as part of its half-yearly results processes and looks forward to updating shareholders in August,” the directors added.

Significant portfolio developments since 31 December included NeoGenomics agreeing to acquire liquid biopsy firm Inivata, resulting in IP Group receiving about £65m in cash and an anticipated increase in its net asset value of around £28m.

Waveoptics, meanwhile, was sold to Snap, in one of Europe's largest deeptech exits, as announced on 17 May.

“Following completion, IP Group has recorded a fair value increase of approximately £20m.”

Oxford Nanopore Technologies raised £202m in new capital, including £125m from new investors Temasek, Wellington Management, M&G Investments and Nikon, with existing shareholders investing £77m.

“Following completion of the round, IP Group has a 14.5% undiluted beneficial stake in Oxford Nanopore, valued at £359m.

“Oxford Nanopore announced in March that it had started the process of preparing for a potential initial public offering.”

Kuur Therapeutics was acquired by Athenex for a total potential consideration of $185m, with IP Group eligible to receive £30m in Athenex stock and up to a further £51m in cash or stock milestone payments.

“The directors anticipate that the transaction will result in an increase in the group's net asset value of approximately £26m.”

Centessa Pharmaceuticals announced that its Nasdaq IPO had closed on 2 June, and its American depositary shares were now trading under the symbol 'CNTA'.

IP Group had previously announced that portfolio company Apcintex had been acquired by Centessa.

“Based on the IPO price of $20 per share, the value of the group's 2.8% holding in Centessa was £36m, resulting in an increase in the group's net asset value of £15m.

“Centessa noted that gross proceeds from the offering totalled $379.5m.”

Diurnal Group announced on 28 May that the European Commission had approved the marketing authorisation for ‘Efmody’, or hydrocortisone modified-release hard capsules developed as ‘Chronocort’, for the treatment of adult and adolescent patients with the rare condition congenital adrenal hyperplasia.

That decision followed the positive opinion issued by the European Medicines Agency (EMA) in March, with the first commercial launch expected in the third quarter of 2021.

Finally, Pulmocide completed a $92m series C financing.

“Following completion and the investment of the first tranche of £2.2m, IP Group will have a 14.4% undiluted beneficial stake in Pulmocide, which will be valued at £8m.”

At 0838 BST, shares in IP Group were up 0.5% at 120.2p.