US

IP Group plc – Proposed strategic investment and co-investment agreement

09 Nov 2009

IP Group, the university intellectual property commercialisation company, is pleased to announce that it has today conditionally agreed to subscribe for a 19.8 per cent shareholding in Fusion IP plc ("Fusion"), the consideration for which is being satisfied by way of a conditional vendor placing of new Ordinary Shares which is fully underwritten by KBC Peel Hunt.  IP Group has also today entered into an agreement with Fusion under which it has acquired co-investment rights in all future Fusion portfolio companies.

  • Fusion is an AIM traded UK public company (RIC: FIP.L) which owns the exclusive commercialisation rights to 100 per cent of university-owned intellectual property generated at two of the UK's leading universities - the University of Sheffield and Cardiff University.
  • Sheffield is the ninth largest and Cardiff is the thirteenth largest university in the UK, based on research income.  The strategic investment will significantly increase the total university research income which IP Group is able to access and provide exposure to a diverse current portfolio of 20 companies.
  • Fusion has 10 year exclusive partnership agreements in place with these universities (who are significant shareholders in Fusion) under which Fusion initially holds 100 per cent of the equity in any university spin-out company on formation. Fusion then generally allocates 40 per cent of the equity to the founder academics and retains the remaining 60 per cent interest.
  • The Group has also today entered into a conditional agreement with Fusion which will grant the Group the right to acquire 20 per cent of Fusion's interest in each new spin-out company created from Cardiff University and the University of Sheffield at a pre-determined valuation. The agreement further provides that, should the Group choose to exercise this right, it will also invest a minimum of 20 per cent of the initial seed capital provided to each such company.
  • The strategic investment and the co-investment agreement will enhance the Group's exposure and proprietary access to the spin-out pipeline from top research institutions with an experienced and effective commercialisation team.
  • The Company has conditionally agreed to subscribe for 10,740,741 new shares in the capital of Fusion, which will, following such subscription and a placing being undertaken by Fusion concurrently with the subscription, represent 19.8 per cent of the then issued share capital of Fusion.
  • The consideration payable by IP Group for the Fusion shares shall be satisfied by the placing of 5,471,699 new Ordinary Shares (the "Placing Shares"), representing 2.2 per cent of IP Group's existing issued share capital, with such third parties as Fusion may direct (the "Placing").
  • KBC Peel Hunt has, on behalf of Fusion, conditionally placed the Placing Shares with institutional and other investors at a placing price of 53 pence, yielding proceeds of £2.9 million to Fusion, which satisfies the consideration payable for the Fusion shares.  The placing price represents a discount of 4 per cent to the closing price on 6 November 2009, being the last Business Day prior to this Announcement.  The Placing is being fully underwritten by KBC Peel Hunt.
  • The Placing Shares will represent approximately 2.1 per cent of the enlarged issued share capital of the Company immediately following Admission.
  • The Directors will together subscribe for 51,510 Placing Shares, further details of which are set out below.
  • The Placing is conditional on, among other things, the passing of all resolutions by Fusion shareholders at the Fusion General Meeting to be convened on 2 December 2009 and Admission occurring by no later than 3 December 2009 (or such later date as the Company and KBC Peel Hunt may agree).  The resolutions to be put at the Fusion General Meeting will, if passed, authorise the directors of Fusion to issue the Fusion shares for which IP Group is subscribing.
  • Fusion have confirmed that they have received irrevocable undertakings to vote in favour of all of the resolutions to be proposed at the Fusion General Meeting from shareholders holding 30,833,851 ordinary shares of one (1) penny each in the capital of Fusion, representing, in aggregate, 73.1 per cent of the voting rights attached to the Fusion ordinary shares.
  • Application will be made to the UK Listing Authority for the Placing Shares to be admitted to the Official List and to the London Stock Exchange for the Placing Shares to be admitted to trading on its main market for listed securities. It is expected that Admission will occur and that dealings in the Placing Shares will commence on 3 December 2009 at which time it is also expected that the Placing Shares will be enabled for settlement in CREST.

Commenting on the transaction Alan Aubrey, IP Group's Chief Executive Officer, said: "We are very pleased to have agreed this proposed strategic investment in Fusion. We have a high regard for the Fusion management team and the portfolio which they have established from the exclusive framework agreements which Fusion has with the Universities of Sheffield and Cardiff, two of the leading research universities in the UK. We believe that the Co-investment Agreement which we have established in respect of new Fusion spin-out companies will further increase IP Group shareholders' exposure to leading scientific research in the UK and we look forward to working together with the Fusion team."

Commenting on the transaction David Baynes, Fusion's Chief Executive Officer, said: "We are delighted to be working with IP Group and welcome them, both as a new shareholder in Fusion and a co-investment partner. Their investment, combined with the strength of our IP pipelines, will enable us to continue to create long term value from Cardiff and Sheffield's world class research."

Enquiries:

IP Group plc   
 +44 (0)20 7444 0050
Alan Aubrey, Chief Executive Officer

Magnus Goodlad, Chief Operating Officer

Greg Smith, Group Financial Controller

Liz Vaughan-Adams, Communications+44 (0)20 744 0062 / (0)7979 853 802
 
KBC Peel Hunt Ltd
 +44 (0)20 7418 8900
 
Capel Irwin / David Anderson / Anthony Bell/Dan Webster

Financial Dynamics
 +44 (0)20 7831 3113
 
Ben Atwell / John Dineen

The full text of this announcement is available on RNS.