IP Group (IPO) was a talking point for two reasons this week, after reporting solid portfolio valuation growth for the first half and upping its offer to acquire Touchstone Innovations (IVO). The investor in intellectual property-based companies, which works closely with university partners, offered Touchstone's shareholders the equivalent of 304p a share rather than the original 289p.
IP reminds shareholders that it is a long-term business where “results can fluctuate from year to year”. This is reflected in the £28.5m net fair value gain within IP’s portfolio, following a £24.5m decline in last year's first half. This improvement was driven partly by funding rounds undertaken within IP’s portfolio companies, which – with net proceeds of £180m from a capital raise – pushed up the adjusted net asset value (NAV) per share to 128p at the period-end from 98p a year earlier.
There were star performers and underdogs within IP’s investment portfolio. Ultrahaptics – a company using ultrasound technology to give the sensation of touch – helped the technology portfolio, after a fundraising drove a £10m increase in fair value. The healthcare business fared less well, with net fair value losses of £11m driven largely by two Aim-traded companies, hVIVO (HVO) and Tissue Regenix (TRX).
IP’s latest offer for Touchstone, another technology investment business, reflects its conviction that a combined business, with a more diversified portfolio and greater critical mass, will provide better value for shareholders.
Stifel analysts forecast adjusted NAV per share of 136p at the November 2017 year-end.
| IP GROUP (IPO) | ||||
| ORD PRICE: | 141.5p | MARKET VALUE: | £986m | |
| TOUCH: | 141.5-141.7p | 12-MONTH HIGH: | 209p | LOW: 126p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 138p | NET CASH: | £263m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | -24.1 | -33.9 | -5.92 | nil |
| 2017 | 34.5 | 18.4 | 2.56 | nil |
| % change | - | - | - | nil |
| Ex-div: | na | |||
| Payment: | na |
