Last close As at 05/08/2026
GBP0.69
▲ 1.40 (2.08%)
Market capitalisation
GBP607m
Research: TMT
IP Group has released its year-end update, indicating that its end-2023 NAV per share will be in the range of 111p to 117p. This would represent a NAV total return decline of c 7–12% versus end-June 2023 and 11–16% versus end-2022. Management highlighted that this was driven by a further softening of valuations of early-stage companies in Q423. That said, management indicated that many of IP Group’s leading portfolio companies continued to make strong progress and it expects some major inflection points in 2024. IP Group’s balance sheet remains robust with gross cash and deposits of £227m at end-2023 (vs £250m at end-June 2023). IP Group expects to release its FY23 results on 13 March 2024.
IP Group |
NAV expected to decline further in H223 |
Investment companies |
31 January 2024 |
Analysts
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IP Group has released its year-end update, indicating that its end-2023 NAV per share will be in the range of 111p to 117p. This would represent a NAV total return decline of c 7–12% versus end-June 2023 and 11–16% versus end-2022. Management highlighted that this was driven by a further softening of valuations of early-stage companies in Q423. That said, management indicated that many of IP Group’s leading portfolio companies continued to make strong progress and it expects some major inflection points in 2024. IP Group’s balance sheet remains robust with gross cash and deposits of £227m at end-2023 (vs £250m at end-June 2023). IP Group expects to release its FY23 results on 13 March 2024.
Softer valuations, but potential catalysts intact
Management had indicated in December that one of its top 20 portfolio companies was carrying out a new funding round (which IP Group participated in with a US$15m follow-on investment) at a valuation that would translate into an unrealised fair value gain of £40m (or 4p per share) to IP Group, according to management expectations (deal completion was expected in mid-January 2024). However, this positive effect was more than offset by fair value reductions across the rest of the portfolio. We note that the share price of the listed Oxford Nanopore (which made up 14% of IP Group’s portfolio value at end-June 2023) stood at 208p at end-2023, while the closing price on 30 January 2024 was 152.1p.
Realisation activity across venture capital (VC) markets remains soft, as illustrated by the €2.2bn exits in Europe in Q423 (vs €6.6bn in Q422 and €25.0bn in Q421), according to PitchBook data. A persistent weak market environment may put further pressure on valuations of VC-backed companies as they approach the end of their cash runway and must return to the market for fresh funding. That said, we also note that 73% and 4% of the European VC funding rounds in Q323 (last available PitchBook data) were carried out at higher and stable valuations, respectively, compared to prior funding rounds (81% and 4% in 2022, respectively).
Despite the reduced portfolio valuations as of end-2023, we note that there are several potential catalysts across IP Group’s portfolio on the horizon, including 1) major clinical milestones of several life sciences holdings, 2) continued top-line momentum across the key deeptech holdings and 3) major technological and funding progress across IP Group’s cleantech holdings.
IP Group continues to buy back shares
Given the wide discount to NAV (currently at c 51–54% based on the NAV per share range indicated by the management for end-2023), IP Group launched a buyback programme in December 2023. It allocated up to £20m of its cash realisations, which stood at £38m between January and November 2023. At the last closing price of 54p, this would imply up to 3.5% of IP Group’s total shares in issue. So far, IP Group bought back c 1.6m shares to 30 January 2024 (c 0.1% of total shares in issue) and currently holds c 27.9m shares in treasury (c 2.6% of total shares in issue).
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Research: Industrials
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