Finding ways to turn ideas into money is the key to every commercial enterprise. For those ideas better defined as ‘intellectual property’, the stakes are higher. Trade wars are now fought in their name. Timing, fortune and fashion play outsized roles. Such an uneven rent-seeking opportunity leads to bouts of frenzied excitement, and then very little.
IP Group (IPO), a seed capital fund for research-based companies, knows this well. In the six months to June, a portfolio that includes equity and debt investments in 155 companies and three multi-sector platform businesses saw £46m of unrealised fair value increases. Unfortunately, there were also unrealised decreases of £47.5m, a third of which was due to the fall in the value of Aim-traded polymer bead specialist Xeros (XSG).
A measly £0.6m profit from equity disposals meant that the value of IP’s portfolio only grew thanks to favourable exchange rate movements. Then again, the holdings were hardly short of activity; there were major fundraisings for DNA sequencing specialist Oxford Nanopore, immunotherapy-focused Carisma Therapeutics, and Enterprise Therapeutics, a developer of drugs for respiratory diseases.
This broadly reflects IP’s current bent. The portfolio balance – in terms of fair value, rather than individual holdings – remains weighted towards life sciences over technology. Couched with reminders that great ideas often require patience, chief executive Alan Aubrey notes “a number of inflection points for several of our companies over the next six to 12 months”.
| IP GROUP (IPO) | ||||
| ORD PRICE: | 126p | MARKET VALUE: | £1.33bn | |
| TOUCH: | 126-127p | 12-MONTH HIGH: | 158p | LOW: 100p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 47 | |
| NET ASSET VALUE: | 140p | NET CASH: | £156m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 34.5 | 16.7 | 2.27 | nil |
| 2018 | 4.5 | -21.6 | -2.09 | nil |
| % change | -87 | - | - | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
