IP Group is a portfolio company that invests in early-stage intellectual property businesses. There can be an eight- to 10-year gestation period between initial investment and sale, with several follow-on investments in between, so big swings in revenues, profits and net assets are more usual than not.
This year all the numbers were up strongly after a weak 2011. Excluding intangible assets, net assets rose 25 per cent to £237m or 65p a share. That partly reflected stronger capital markets, which buoyed the fair value of IP's 15 portfolio companies that are traded on Aim. Yet it also included the proceeds of the group's first significant portfolio sale. Last August Upsher-Smith Laboratories, a US drug company, bought Proximagen, a spin-out from King's College, London, that is working on neuro-degenerative diseases such as Parkinson's. IP Group received £15.4m in cash for its stake - 35 times its investment - with a further £9.2m potentially due from contingent value rights.