IP Group introduces buyback and new dividend

Seed capital fund IP Group (IPO) reported that the fair value of its portfolio grew by 7 per cent to £1.25bn over the six months ended in June, led by lucrative takeovers of some of its key holdings. 

The group logged net gains of £143m, representing a return of around 12 per cent on the value of its opening portfolio. Management noted that it had exited its position from six companies, contributing to total cash proceeds worth £111.4m in the first half of the year alone. That was led by the disposal of its holding in Inivata Limited, the life science business, for £64.6m. Second largest was £29.4m in gains from Wave Optics Limited, the augmented reality (‘AR’) company acquired by social media giant Snap (US:SNAP). 

Management invested a further £69.5m in the first half, of which £1.8m was directed toward new opportunities, including hydrogen production in Australia. 

The upcoming IPO of its largest holding, biotech company Oxford Nanopore, should provide another cash boost. IP Group values its 15 per cent stake in the business at £340m, and its mooted market cap of £2bn would make it the third unicorn to emerge from IP’s portfolio, after Hinge Health and Ceres Power (CWR). 

But IP Group already has plenty of cash on hand, with a pile exceeding £200m. Small wonder that the group also announced its first share buyback plan worth £20m, as well as a maiden half-year dividend of 0.48p per share. Management is evidently feeling confident, and the begging of the distribution of its surplus capital back to shareholders looks enticing. Buy. 

Last IC View: Buy, 121p, 18 Mar 2021