The IUG deal is expected to be confirmed in September/October 2024, which leads to another cash payout for IPO of 20% of up to £40m.
IUG is expecting to distribute a substantial amount of the proceeds. |
It's interesting that the datum used for the cash and listed assets on the BS was 31st August. ONT was priced at about 120p at that time, now 160p. |
 Great to have this confirmed.
Well done those of you who got the sums correct!
Putting this here for future reference using 'search thread'.
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IP Group plc - Visa to acquire portfolio company Featurespace
IP Group to receive £134m cash; £51m uplift in NAV from 31 December 2023 valuation[1]
IP Group plc (LSE: IPO) ("IP Group" or "the Group"), which invests in breakthrough science and innovation companies with the potential to create a better future for all, is pleased to announce that Visa has signed a definitive agreement to acquire portfolio company Featurespace for an undisclosed sum.
As a result, IP Group expects to receive £134m total cash for its holding in Featurespace. Of this, £119m will be received on completion and £15m will be subject to deferral, as is typical for an acquisition of this type. The Directors anticipate that the transaction will result in an increase from the Group's FY23 net asset value of approximately £51m1 (a 70% increase), of which £37m1 was recognised in our HY24 results. This further evidences the appropriateness of the Group's approach to portfolio valuation. The transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals, and the Group will provide a further update following completion.
The Group was the first institutional investor in Featurespace in 2012. It has invested a total of £22.9m over seven financing rounds and is currently Featurespace's largest shareholder.
Greg Smith, Chief Executive of IP Group, said: "Having supported Featurespace for over ten years, we are delighted with this record exit, which represents an excellent financial return for IP Group. Our congratulations go to Martina King, Dave Excell and the Featurespace team. This transaction, which follows the sales of Garrison this year and Wave Optics in 2021, further validates IP Group's model and our expertise in identifying and supporting businesses to successful exits."
As at 31 August 2024, IP Group had £183.7m gross cash and deposits while the Group's holdings in listed companies were £128m, which together represented approximately 76% of the Group's market capitalisation at that date.
[1] Net of carried interest and deal costs |
And don't forget ONT, the jewel in the crown. Highly undervalued, if that's not too oxymoronic...
That said, there's so much despondency/lack of belief around the BoD's ability or willingness to drive shareholder value that I suspect many will be selling on any up swing. Special or renewed dividends might help rekindle support but otherwise it's been hard to justify holding a share that persists in going nowhere despite share buy backs. |
The cash means options. It should allow them to play hardball on an other portfolio companies for sale. Plus potentially finance any of the biotechs to a later stage. |
WShak, what's your assessment of Nav, if not identical to IPO's given estimation? |
It's worth much more than that in practical terms, IMHO.They now have a huge amount in cash relative to their market cap. Sure, they can pay some debt off, but they've already said they will look to buy back shares until the discount is less than 20%.Why would they do anything other than a huge tender offer now?NAV will only increase further as they buy the shares back at a discount. |
Not only does the deal add to NAV, but the market obviously places a much smaller discount on cash than it does on a PE asset that can't really be valued independently. (assuming management says the right things about managing that cash) |
The deal adds £51m, about 5p to NAV, above FY23 (but less in H1 this year). |
This is transformative in terms of buybacks.They've said they will buy back up until only 20% discount if able to. |
I'd guess as the group has a nav around 115p. And it's proving its worth, maybe the discount isn't warranted. But who knows, share prices rarely make much sense to me. Lots languish at rock bottom prices only to get taken out on the cheap.Good luck to all those long term holders. |
Surprised the price is still rising given the strength of the rumours. Maybe the market is anticipating a return of capital? |
Big fat bonus for the board? |
Featurespace signed. Numbers look roughly as speculated.
CHRY already prepping share buyback details. I wonder what we'll get from IPO... |
Featurespace acquired |
This is the first time since the end of 2021 that we have seen the 200sma stop falling. |
Important few days, Istesso extended the end point of their phase 2 to line up with the phase 1at the end of Sep and Featurespace closure.Meanwhile Oxford nano likely to move to Index and Centessa still looking strong. |
@houseofpain1 Good to know. Thanks.
I've only owned IPO for a few weeks - somehow I timed the floor at 37p and topped up a bit more later - but having lurked on this board for awhile previously it seemed the consensus was that IPO is a bit of a dog with terrible management. (therefore the massive discount, above and beyond a "normal" PE discount)
I understand IT/ICs not wanting to shrink themselves out of existence (through buybacks and tenders), but equally any heavily-discounted IT/ICs not saying "the clear best investment we can find is our own shares" is a major red flag for me. |
@craigso A few points to make:
IP's buyback was recently extended to £30m.
Their current capital allocation policy is to reinvest the majority of cash proceeds "with a smaller proportion used to deliver a cash return to investors". (Perhaps deliberately) a bit vague and certainly a lot less clear than CHRY's but, based on this, it seems that a minority (perhaps 33%, but who knows?) of the Featurespace sale proceeds will come back to shareholders - most likely by way of buyback given the discount but I guess a tender offer, or even a special dividend, is also a possibility.
Lastly, it's worth noting that IP is not technically an investment trust but an investment company. Its management team is therefore internalised and the vehicle will not face continuation votes etc in the way that ITs almost invariably do. Not to say that shareholder pressure can't be brought to bear in other ways but I don't see any activists on the shareholder register at present. |
@rimau1 It is true that CHRY has a clearer policy for any Featurespace proceeds, but if IPO sticks with their £20m share buyback instead of increasing it substantially (or running a tender), they're surely going to annoy major shareholders and lose the next continuation vote...
And any time an IT trading at a major discount manages to sell something big at >NAV, perception of the appropriate discount inevitably improves. |
So need to try to do some digging on Istesso, which is likely to be the next catalyst, in either direction. Otherwise should (!) grind marginally higher. With a credible NAV, even in a bombed out market, discount should shrink towards private equity names, ie no more than 40% |
Its not about primarily about NAV because both Chry and IPO have revalued their holdings in Featurespace. Chry will rise more on this news because any further realisations unlock a formal share-buyback mechanism. As you know IPO are already buying back. |
Don't mind the market being a bit slow while I add thanks Craig. |
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