Two companies that stand out are Hysata and Istesso. Hysata is the world's most efficient hydrogen electrolyser company and has made significant technological process this year. It has received an incredibly high level of commericial interest for such a young company.Istesso discovers and develops drugs for severe chronic diseases such as rheumatoid arthritis. Its current lead compound is in clinical trials and has shown promising signs that it may act as a cure to the underlying condition as well as just treating symptoms.
IP group expects significant inflection points from the underlying portfolio in the next 12-18 months to drive net asset value [NAV] per share. The capital allocation policy is to reinvest the majority of cash proceeds, with a smaller portion returned to shareholders. Since the adoption of this policy in 2021, IP Group has returned over £70m to shareholders.IP Group is also making significant strides to boost its investor relations efforts and tell the equity story worldwide.
The two main challenges IP Group faces in the current market conditions are capital allocation and performance.In the difficult market conditions there are less exits and its hard to raise capital. This means IP Group must be prudent in managing its cash in terms of investments and returns to shareholders. IP Group is in a strong position, holding lots of cash and liquid assets. Despite difficult markets, IP Group portfolio companies need to continue to perform. In the near-term, this means successful clinical trials for some of the therapeutics companies and continued growth in their deeptech holdings.
IP Group uses a conservative approach to valuations. Transparency and rigour around its approach is paramount. A substantial proportion of the portfolio is valued at a public share price, or the price of the last funding round. For a significant value of the portfolio, IP Group also gets an independent valuation produced. The Group’s external auditors typically sample more than 90% of the portfolio. For a deeper dive on the valuations approach, see the IP Group carousel below.
In the UK there's an increasing discussion around long term capital supporting growth. This includes pension funds directing more capital into private assets and growth assets with the aim of stimulating the economy. IP Group is positioned well to benefit from this.
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