Last close As at 05/08/2026
GBP0.69
▲ 1.40 (2.08%)
Market capitalisation
GBP607m
Research: TMT
IP Group’s private portfolio valuations remained broadly stable in H123, with its c 4.1% NAV decline in total return (TR) terms mostly due to a de rating of listed holdings (Oxford Nanopore, ONT, in particular) and FX headwinds, though subsequently largely offset by a rebound in quoted holdings to date. IP Group’s holding-level liquidity remains firm and 84% of its direct portfolio holdings have a cash runway of 12 months or more. IP Group shares continue to trade at a wide 53% discount to NAV.
IP Group |
Remaining on track despite tough markets |
Investment companies |
2 August 2023 |
Analysts
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IP Group’s private portfolio valuations remained broadly stable in H123, with its c 4.1% NAV decline in total return (TR) terms mostly due to a derating of listed holdings (Oxford Nanopore, ONT, in particular) and FX headwinds, though subsequently largely offset by a rebound in quoted holdings to date. IP Group’s holding-level liquidity remains firm and 84% of its direct portfolio holdings have a cash runway of 12 months or more. IP Group shares continue to trade at a wide 53% discount to NAV.
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IP Group’s portfolio by cash runway at end-June 2023 |
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Source: IP Group. Note: Direct holdings with IP Group’s investment holding value above £4m |
Holding-level liquidity and cash runways remain solid
IP Group maintains a strong holding-level balance sheet, with gross cash and deposits at end-June 2023 of £250m or c 19% of NAV (£111.7m net of borrowings) and total gross liquidity including listed holdings of over £450m. Moreover, most of its direct portfolio holdings with and investment value above £4m have a good cash runway, with 33% by value (including ONT) funded to profitability and only 16% requiring funding before H224. Therefore, IP Group continues to pay out dividends, with the latest final payout of 0.76p in June. IP Group collected £32.2m of gross cash proceeds in H123, primarily from the second tranche of consideration for the sale of WaveOptics.
Continued operational progress across the portfolio
Management’s outlook for the clinical trial progress across IP Group’s Life Sciences portfolio (c 46% of total portfolio value including ONT) remains stable versus May 2023 when we published our life sciences deep dive. Twelve companies have ongoing clinical trials at present and seven companies are targeting key clinical milestones over the next 12–18 months. Most notably, Istesso’s Phase IIb trial for MBS2320 in rheumatoid arthritis remains on track and the company recently received approval to start an additional Phase II trial in idiopathic pulmonary fibrosis in H223. We also note that ONT’s Life Sciences Research Tools revenue grew by 22% in H123, broadly in line with its FY23 guidance of 16–30%.
Major deeptech holdings (Featurespace, Garrison, Ultraleap, 10% of IP Group’s total portfolio value) continued to grow revenues by a double-digit rate in H123. Within the cleantech portfolio, Hysata (which develops a new type of breakthrough hydrogen electrolyser, 2.5% of total portfolio value) has been a standout performer, achieving a key milestone several months ahead of schedule.
Private valuations still quite resilient
Following a 2% NAV TR decline in H222, private valuations continued to be on average broadly stable in H123, with the fair value of IP Group’s private holdings (including LP investments) down only marginally by around £4m excluding FX in H123. Key positive valuation contributors include Hysata (£9.2m valuation gain), revalued by c 49% on the back of strong technical progress, Centessa Pharmaceuticals (£6.2m), whose share price doubled in H123, and Istesso (£3.1m). Major negative contributors (apart from ONT, £27.8m loss) include the North American Platform (£9.1m loss) and Athenex (£6.5m realised loss), which went into administration.
Moreover, IP Group booked a £5.2m mark-down on its Oxehealth holding following a recent down round. That said, we note that 72% and 14% of the 14 new funding rounds across IP Group’s portfolio in H123 were up rounds and flat rounds, respectively (broadly in line with the 72% and 10% for European venture capital rounds in Q123 according to PitchBook, respectively). Total funds raised by IP Group’s portfolio companies in H123 stood at around £300m (vs £350m in H122), including a £42m funding round completed by Quantum Motion – the largest ever single investment in a quantum computing startup in the UK. IP Group invested around £59.8m during the period, including a £15m convertible loan note investment in Istesso and £6.6m across the North American platform, as well as £4.7m in Hysata.
Management highlighted that the Series C funding round of First Light Fusion (on the back of its recent successful achievement of nuclear fusion) is somewhat behind schedule due to the continued unfavourable macroeconomic environment. That said, IP Group sees good interest in the fund-raise and expects it to close this year. Meanwhile, First Light Fusion signed in June 2023 an agreement with the UK Atomic Energy Authority’s Centre for Fusion Energy to construct Machine 4 (its ‘gain demonstrator’ and the building block for a pilot plant) on the Culham campus. The holding’s fair value remained unchanged in H123 at £114.5m at end-June 2023 with an estimated valuation range (based on inputs from a third-party valuer) of £62.1–123.5m. It is therefore IP Group’s second-largest holding (after ONT), representing 9.0% of total portfolio value.
We note that, overall, only 15% of IP Group’s portfolio is valued based on a funding round completed more than 12 months ago, with 21% based on more recent funding rounds and c 24% derived from an adjusted financing price based on past performance (see below). We also note that four of the top 20 holdings (c 20% of portfolio value) were valued by a third-party specialist at endJune 2023: First Light Fusion (adjusted funding – upwards), Featurespace (revenue multiple), Hinge Health (adjusted funding – downwards) and Ultraleap (adjusted funding – downwards).
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Exhibit 1: IP Group’s portfolio by valuation method |
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Source: IP Group |
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Research: TMT
discoverIE has announced its first acquisition this fiscal year, buying Silver Telecom Limited (Silvertel), a designer and manufacturer of power-over-ethernet (PoE) solutions, for £21m in cash. UK-based but with an international customer base, the deal follows the group strategy to expand outside of Europe. On completion (expected by the end of H124), the deal should be immediately accretive to EPS and operating margins.