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23 May 2017

Investment unit of the year: IP Group

IP Group has been awarded Investment Group of the Year by Global University Venturing.

Author: Thierry Heles, editor

IP Group, much like its fellow nominees for the Investment Unit of the Year 2017, has proven one key thing time and again: being in university venturing pays off.

When the firm won the same award in 2014, one of the deals that was highlighted was IP Group’s investment in Oxford Nanopore Technologies, which has created a portable DNA and RNA sequencer.

Back then, Oxford Nanopore had collected a total of £180m ($230m) in total funding but since then the spinout collected another £70m in 2015 from unnamed new and existing investors. More recently, the spinout raised a £100m funding round in December 2016 from IP Group, GT Healthcare, which led the round, and Woodford Investment Management.

Although there have not been any reports of an exit yet, Oxford Nanopore’s successes to date indicate that when the day comes it will prove a significant windfall for IP Group and the other shareholders.

IP Group is no stranger to helping its portfolio businesses enter the stock market; it has been doing exactly that since its own flotation in 2003, which was followed within less than half a year by an initial public offering of Offshore Hydrocarbon Mapping (OHM), a spinout of Southampton University that has developed remote electromagnetic sensing services designed to detect the presence of offshore oil and gas.

David Norwood, then the chief executive of IP Group (known then as IP2IPO), said at the time: “OHM is a tremendous success story. The rapid development of the business since formation is a testament to the innovation of OHM’s academic founders and the quality of its management team.

“OHM’s flotation is a landmark for IP2IPO and Southampton University, showing how effectively we are able to identify promising university IP and assist in its development all the way to IPO.”

Incidentally, David Norwood and Jim Wilkinson are the joint recipients of the award for Personality of the Year. We have taken a closer look at Norwood’s career in the piece going along with that award.

While IP Group’s flotation has proven fruitful – its stock soared to an all-time high of £2.64 in early 2015, though it has since stabilised to hovering between £1.40 and £2 – the firm has also grown thanks to strategic acquisitions.

In early 2014, IP Group acquired itspeer Fusion IP, adding Cardiff, Sheffield, Nottingham and Swansea universities to its roster of partner institutions.

Then in December 2016, IP Group acquired fund manager Parkwalk Advisors, for £10m in a deal that could yet double to £20m if Parkwalk meets certain performance targets. The transaction gives IP Group access to funds managed on behalf of Cambridge, Oxford and Bristol universities – an impressive boost to the firm’s arsenal. The acquisition was good news for Parkwalk, too.

Alastair Kilgour, co-founder of Parkwalk, said: “The acquisition of Parkwalk by IP Group gives our underlying investors the security of being part of a larger organisation, which also brings with it specialist resources and expertise around developing businesses formed around hard science. “The strength of IP Group will allow Parkwalk to expand and enhance its EIS fund offerings, helping to boost the UK technology base and returns to investors.”

IP Group has in fact been firing on all cylinders over the past year, its new portfolio businesses include companies as diverse as Microbiotica, a spinout of genomics research institute Wellcome Trust Sanger Institute that raised £8m in funding in December, and Consequential Robotics, a robotic systems developer spun out of Sheffield University. Meanwhile, its foray into the US is also progressing well, with portfolio companies including Exyn Technologies, an autonomous aerial robot technology developer spun out of Pennsylvania University, and Uniformity Labs, an industrial additive manufacturing spinout of Princeton University. Exyn, in fact, was the first US-based spinout that IP Group had helped establish in late 2014 and supplied $1m to at the time.

There might be an argument for not giving the award to the same investment firm twice in a row, but when you are making headlines like IP Group is, the decision to choose a returning winner is also a straightforward one – as deserving as all nominees in this category are.

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