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Uncovering hidden value

A company that provides a range of commercialisation services to university spin-outs in return for ‘free equity’ stakes has made eye-catching gains following the IPO of a clinical-stage pharma technology company
Uncovering hidden value
  • Exscientia’s IPO values Frontier IP’s stake at £25.3m, or 45 per cent of its own market capitalisation
  • Pro-forma NAV per share of 91p up 60 per cent on last valuation and that excludes any other investee company valuation uplifts.
  • Portfolio companies Pulsiv Solar and CamGraPhIC making operational progress and raise new money at premium pre-money valuations.

Amid the stock market volatility in recent weeks, UK investors have overlooked a major portfolio announcement from Frontier IP (FIPP:103p), a £57m market capitalisation investment company that provides a range of commercialisation services to university spin-outs in return for ‘free equity’ stakes.

That’s because Frontier’s largest portfolio company, Exscientia (EXAI:NSQ), a clinical-stage pharma technology company pioneering the use of artificial intelligence (AI) to design new drugs, has just listed its shares, at $22, on Nasdaq in an IPO that raised $304m for the company and valued it at $2.6bn. Frontier IP owns 1.565m of the 117.9m American Depository Receipts in issue, giving it a 1.3 per cent stake worth $34.9m (£25.3m). The stake was only held in Frontier’s accounts at £6.3m (11.4p a share) at 31 December 2020, so there is a marked-to-market gain of £19m (34.5p a share) to add to Frontier IP’s last reported net asset value (NAV) of £31.2m (56.7p a share). Effectively, pro-forma NAV per share is around 91p and this excludes any gains made on other portfolio companies since the start of 2021.

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