Intellectual property commercialisation company IP Group (IPO) is the largest holding in Mid Wynd International Investment Trust's (MWY) portfolio, accounting for 5.9 per cent of assets at the end of July. Michael MacPhee, manager of Mid Wynd, says the rationale for his holding is that IP Group gets more involved with its investee companies than traditional venture capital, giving them access to business building expertise, networks, recruitment and business support.
"IP Group has unrivalled access to the best ideas emanating from a growing range of the UK's best universities," says Mr MacPhee. "It adds value by helping develop ideas into companies and often into large, successful enterprises. Help takes the form of funding, people, collaboration and at times, ultimately, listing. Many interesting businesses have started life with IP Group."
Mid Wynd also separately owns shares in Retroscreen Virology (RVG) and Tissue Regenix (TRX), two such companies that are in the process of being spun out and have been listed.
"While IP Group stands at a premium to its net asset value (NAV), this is a backward-looking measure in most instances and fails to reflect the very significant progress being made by a number of its investments," says Mr MacPhee.
IP Group actually detracted from the Mid Wynd International's one-year performance to 30 June. "Much had gone very well for the group over the past 12 months, as our spun out holding in Retroscreen Virology demonstrates. However, a combination of delays with its commercial product launch and a news blackout tied to litigation now successfully concluded has held up developments at Oxford Nanopore, a meaningful but by no means dominant part of IP Group's value, " explained Mr MacPhee. "However, we are hopeful that Nanopore will soon update the market on progress and remove the information void that has led to volatility in IP Group's stock."
Investors Chronicle rated IP Group a sell at 136p on 6 March 2013.This was because although IP's sale of Proximagen, which works on neuro-degenerative diseases such as Parkinson's, netted the company £15.4m - 35 times its investment and proving IP's unusual business model, "the shares now trade at well over twice the company's tangible NAV, leaving even the hold case looking speculative."IP Group's price is 135p (27 August 2013).
