IP Group aims to build on UK’s ‘science superpower’ ambition despite difficult funding environment
A “challenging” environment for early-stage companies impacted IP Group in 2023, as the value of companies in its portfolio slipped compared to the year before.
At the end of last year, the FTSE 250’s investment fund’s net asset value (NAV) stood at £1.2bn, down from nearer £1.4bn at the end of 2022.
NAV takes a fund’s assets minus its liabilities and divides it by the number of shares. It is a way of calculating the value of an investment fund.
“A negative return of 13 per cent on NAV per share, was disappointing and below our longer-term aspirations,” chief executive Greg Smith said in a statement.
Its shares were trading at 51.98p on Wednesday morning. Its NAV per share was 114.8p at the end of 2023.
IP Group invests in high-growth tech and life sciences firms. The reduction to its NAV came as a number of portfolio firms saw their values fall largely due to “a more difficult funding environment.”
“The market environment for early-stage investing remained challenging in 2023,” Smith noted.
IP Group’s shares trade at a significant discount to NAV, meaning investors have taken a relatively bearish outlook on the fund’s investments.
“We recognise that continuation of this discount is of considerable disappointment to our shareholders,” Smith said. Last December, IP Group paused paying dividends and committed to buying back shares when the discount to NAV exceeded 20 per cent to see if it could narrow the gap.
Despite the challenging environment, IP Group’s loss narrowed to £174m from £344m in 2022.
Smith said the fund was well placed for the year ahead, pointing to a number of “significant portfolio inflection points”. Over ten portfolio firms are now in clinical studies, with key data expected by the end of 2025, the company said.
IP Group finished the year with £227m in gross cash, which Smith said was “an important strategic asset” given the current environment.
“We are one of the companies most closely aligned with the UK’s ‘science superpower‘ ambition, which we intend to build on this year,” Smith said.
During the year, the company made £73.2m of portfolio investment into 33 companies compared to £93.5m across 46 companies in 2022.