IP Group launches Modern Water

15 Dec 2006

IP Group plc (LSE: IPO) ('IP Group'), the intellectual property commercialisation company, is delighted to announce the launch of a new subsidiary, Modern Water Limited ('Modern Water' or 'the Company'), to establish and exploit a portfolio of water technologies to address the global problems of economic availability of fresh water and the treatment and disposal of waste water.

The creation of Modern Water forms an integral part of IP Group's strategy of establishing businesses, run by specialist management teams, to address particular issues affecting the global economy through the creation and management of a portfolio of intellectual-property based investments. Modern Water, which is building a portfolio of intellectual property based novel 'water solutions', is headed by Executive Chairman Neil McDougall, one of the most experienced water-industry experts with an impressive track record in this sector. Simon Humphrey, who has over 16 years experience in the sector, is Chief Executive Officer of Modern Water.

IP Group and Modern Water's management team have committed £2.2 million in cash to Modern Water, and are delighted to announce that Modern Water has invested £1.0 million of this commitment in three exciting water-related technologies. These include an innovative and potentially cost-saving desalination process, a technology that continuously measures acute water toxicity and a patented process for flushing toilets with seawater rather than freshwater. Modern Water is actively seeking further opportunities.

Modern Water is the second subsidiary that IP Group has created to address issues of global importance, having launched Modern Biosciences in 2005 to address the problem of poor product pipeline within major pharmaceutical companies. IP Group has a 67.7% stake in Modern Water.

Modern Water's portfolio

Modern Water has taken a 30.0% stake in Surrey Aqua Technologies Limited ('Surrey Aqua'), a spin-out from the University of Surrey.

Surrey Aqua has developed a unique 'reverse osmosis' process to purify salt water that has significantly lower costs, using less energy. It is based on technology developed at the Centre for Osmosis Research & Applications (CORA), University of Surrey.

Dr Adel Sharif, Founder and Director of CORA, won the 2005 Royal Society Brian Mercer Senior Award for innovations for his work on novel applications of Manipulated Osmosis in desalination and water treatment processes as well as a DTI Smart Award (Small Merit Award) for Research and Technology. Surrey Aqua Technologies is currently in negotiations with major blue chip companies and organisations to licence its technology.

Modern Water has a 16.6% stake in CYMTOX Limited ('CYMTOX'), a Cardiff-based business which has a new water technology that monitors acute water toxicity on a continuous, real time basis.

The CYMTOX technology is a water monitoring device that acts like a 'modern day canary', constantly checking a very wide range of toxicity and warning of any suspicious changes. It is capable of being fully automated and taking specific computer controlled actions. The core technology, which is based on the very well established science of bioluminescence, is in the process of being fully patented. The technology has been proven to identify 1/1000th of a lethal dose of cynaide in water in just 3 seconds compared to currently available products that detect in 15-120 minutes.

CYMTOX's target markets are major sensitive customers who have a strong need for confident protection against contaminated water including drinks and food manufacturers, water treatment, supply and particularly distribution systems through to the 'tap' and water sources (boreholes, rivers and reservoirs).

Modern Water also has a 51.0% stake in Poseidon Water Limited ('Poseidon'), a South Wales-based company which has pioneered the 'Poseidon Water System' process to enable toilets to be flushed with seawater rather than freshwater.

Independent statistics show that 30% of water used in hotels, tourist facilities, offices and homes is used for flushing toilets. The Poseidon 'Sea Water Cycle' is a viable alternative that could be made available to a significant number of the world's population. Currently 350 million people live in 'water stressed' areas while more than 70% of the world's population lives within 50km of the sea.

Management

Neil McDougall, Executive Chairman of Modern Water, is a water investment expert who led the highly successful acquisition of Mid Kent Group plc. A qualified Chartered Accountant, Mr McDougall was also Chairman and one of the founder shareholders of Bream Investments, a special purpose vehicle set up for the attempted £4.4bn acquisition of AWG, the owner of Anglian Water. He has also advised on a number of other water-based projects and acquisitions.

Mr McDougall was Chairman of Swan Group plc ('Swan'), the holding company for a number of businesses including Mid Kent Water plc. Swan was set up in May 2001 to take private Mid Kent Holdings plc, a company quoted on the London Stock Exchange, with £200m of funding from WestLB. It was sold in 2005, realising a substantial surplus for the shareholders.

He was also Chairman and Chief Executive of Cascal, a joint venture between Biwater plc and Nuon N.V. specialising in investing and operating domestic and international water companies and public-private partnerships, and a director of P&O Developments where he was responsible for P&O's property development and investment portfolio in Continental Europe.

Simon Humphrey, Chief Executive of Modern Water, has been an Investment Manager at Laing O'Rourke focussed on water-related opportunities and a director of Glen Water Ltd, a 50:50 joint venture with Thames Water, the preferred bidder for Project Omega, a £135 million wastewater PPP project in Northern Ireland. Prior to that, Mr Humphrey was Investment Director at Spring Capital where he worked with a large UK venture capital group on a bid for a UK water company and where he also led a team to bid for two water companies in Chile. He was also Investment Director at Cascal, where he was responsible for structuring, financing and leading bids for a number of publicly owned water and wastewater companies, having previously spent five years at Biwater in a number of roles including financial analyst, financial controller, management accountant and
project manager.

Alan Aubrey, Chief Executive of IP Group, said: "We are really excited by the launch of Modern Water and are delighted to have attracted such a strong management team. Neil and Simon are not only experts in this sector but also have excellent corporate track records which will be invaluable to the Company. Modern Water has ambitious plans to be the dominant player in water technologies in the World and is starting life with three very promising opportunities."

Neil McDougall, Chairman of Modern Water, said: "Modern Water represents an exciting opportunity to develop and commercialise technology for the water sector, an area that has remained underdeveloped until now. I look forward to working with IP Group who have excellent relationships with a number of universities and have demonstrated a strong track record of bringing technology to market."

For further information, please contact:

IP Group plc                                    020 7489 5200

Alan Aubrey, Chief Executive Officer
Liz Vaughan-Adams (communications)              020 7489 5206/07979853802

Modern Water

Neil McDougall                                  07740 930 303

Buchanan

Tim Anderson, Mary-Jane Johnson, Mark Court    020 7466 5000

Notes for Editors

About IP Group

IP Group Plc is an intellectual property (IP) commercialisation company that specialises in commercialising university technology. Founded in 2001, IP Group listed on AiM in October 2003 and moved to the Official List in June 2006. It has made two acquisitions to date - Techtran, a company set up to commercialise university intellectual property under a long term contract with the University of Leeds, in 2005 and Top Technology Ventures, an investment adviser to early stage technology venture capital funds, in 2004.

The group has formed long-term partnerships with ten universities - the University of Oxford, King's College London, CNAP/University of York, the University of Leeds, the University of Bristol, the University of Surrey, the University of Southampton, Queen Mary (University of London), the University of Bath and the University of Glasgow.

As at 30 June 2006, 44 spin-out companies had been created among the group's university partners. Of those, eight have listed on the AiM market of the London Stock Exchange and there have been two trade sales.

For more information, please visit our website at www.ipgroupplc.com.

 

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