Edison Investment Research Limited
London, UK, 13 September 2022
IP Group Trust (IPO): Initiation — International investor in impactful innovation
IP Group is well-financed and trading at a discount of c 50% to its H122 NAV/share (137p), which we believe represents a compelling opportunity for long-term and impact investors. If management can deliver on targeted average gross returns of 20% for H122–H127 through a renewed focus on its priority companies, we believe IP Group’s discount to NAV would narrow, further lifting average annual NAV/share over this timeframe. IP Group provides liquid exposure to a growing portfolio of high-growth science-based start-ups from its international ecosystem. The company invests primarily in life sciences, deep tech and renewables, and is increasingly focused on companies that will have an impact, to deliver a sustainable, healthier and tech-enriched future. After a 15+ year gestation period, its model appears to have started to mature in FY19, with returns and realisations accelerating (FY19–21 NAV/share growth of 24%).
IP Group has delivered a gross IRR over its 20-year life to FY21 of over 14%, with a more recent two-year NAV per share CAGR of 24% FY19–21. Management aims for venture returns and as such is targeting 20% on average over the next five years to FY26 as the group accelerates its portfolio of priority companies, a number of which are close to value inflection points. IP Group is well-financed and currently trading at a c 50% discount to its latest H122 NAV (137p), and we believe this represents a compelling opportunity for long-term and impact investors.
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