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IP Group plc - Investment in Oxford Sciences Innovation plc and proposed cash placing

14 May 2015

THIS ANNOUNCEMENT, INCLUDING THE APPENDIX AND THE INFORMATION CONTAINED IN IT, IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, SOUTH AFRICA OR ANY OTHER STATE OR JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICES WITHIN THIS ANNOUNCEMENT.

Investment in Oxford Sciences Innovation plc and Proposed 5 per cent. cash placing

IP Group plc (LSE: IPO) (“IP Group”, the “Company” or “the Group”), the developer of intellectual property-based businesses, is delighted to announce that it has broadened its exposure to future spin-out companies from the University of Oxford (“the University”) through the acquisition of a strategic shareholding in Oxford Sciences Innovation plc (“OSI”).

OSI is a newly-formed company that will, for a minimum of 15 years, be the contractually preferred partner of the University (and its wholly owned subsidiary, Isis Innovation Limited (“Isis”)) to provide capital to, and develop, spin-out companies based on research from the University’s Mathematical, Physical and Life Sciences Division and its Medical Sciences Division. The Board of OSI is chaired by David Norwood, who has had a long career building a number of science, technology and investment companies. Alan Aubrey, Chief Executive Officer of IP Group, will serve on OSI’s board in a non-executive capacity.

IP Group will have an initial beneficial equity stake of 17.9 per cent. in OSI after committing £40 million of funding. Other cornerstone investors in the initial round, which totals £210 million, include Invesco Asset Management Limited, Lansdowne Partners (UK) LLP, Oxford University Endowment Fund, the Wellcome Trust and Woodford Investment Management LLP. OSI may seek to raise up to an aggregate total of £300 million through a second close of up to £90 million later in 2015.

IP Group intends to fund its investment in OSI via a placing of up to 26,898,271 new ordinary shares in the Company (the "Placing Shares") with institutional investors (the "Placing").

The Placing is being conducted through an accelerated bookbuilding process (the "Bookbuild") which will be launched immediately following this announcement. Numis Securities Limited ("Numis"), is acting as Bookrunner and Corporate Broker in connection with the Placing.

Alan Aubrey, Chief Executive of IP Group, said: “IP Group has a long and successful history with the University through which we have backed approximately 20 spin-out companies to date including Oxford Nanopore Technologies Limited, Velocys plc, Summit Therapeutics plc and Genomics Limited. Going forward, the Group will have exposure to a much wider range of scientific research from Oxford and we are excited to be continuing on this journey together with OSI and the other cornerstone investors.”

David Norwood, Chairman of OSI, said: “The University of Oxford has been the birthplace of some of the best science in the world and some of the biggest ideas in history. The agreement with OSI and the strength of the cornerstone investors create a fantastic opportunity to turn world-leading science into market-leading companies and the opportunity to create significant value for all stakeholders. I have been involved with IP Group for many years and am looking forward to continuing to work with the team.”

The University aims to be a leader in innovation and entrepreneurship, building on its position as a world-leading centre of learning, teaching and research. University staff have won a total of 32 Nobel prizes across Chemistry, Physics and Medicine. Oxford was ranked number one for the quality of its research in the UK’s recent Research Excellence Framework and is consistently ranked among the top three universities in the world. The two science divisions are supported by a total research spend of over £400m annually.

The University also has a long track record of developing global science and technology businesses through Isis. Isis has established over 100 spin-out companies based on technology developed by the University of Oxford researchers since 2000, including eight in the last year.

IP Group currently has access to spin-out companies from the University’s Institute of Biomedical Engineering (“IBME”) as a result of its stake in, and informal commercialisation alliance with, Technikos LLP, a venture capital fund specialising in early-stage medical technologies. Technikos LLP’s long-term commercialisation agreement with the IBME is in place until October 2022. The Group’s original 15-year contract with the University’s Department of Chemistry is due to expire in November 2015 at which point future spin-outs from this department will fall under the OSI agreement in full.

Highlights of the Placing

  • Under the terms of the Placing the Company intends to issue new ordinary shares, representing up to approximately 5 per cent. of IP Group's current issued share capital.
  • The net proceeds of the Placing will be used by the Group primarily to fund its subscription to OSI as well as to provide capital to new and existing spin-out companies and to continue to expand its access to technology from its partner universities and other research intensive institutions.
  • The Placing Shares, when issued, will be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of two pence each in the capital of the Company, including the right to receive all dividends and other distributions declared, made or paid on or in respect of such shares after the date of issue.

Details of the Placing

Under the terms of the Placing, IP Group intends to place the Placing Shares, representing up to 5 per cent. of the existing issued ordinary share capital of the Company, with both existing and new institutional investors. Members of the public are not entitled to participate in the Placing. The Placing is subject to the terms and conditions set out in the Appendix to this announcement (together, this announcement and the Appendix, the "Announcement").

The Bookbuild will open with immediate effect following this Announcement. The number of Placing Shares and the price at which the Placing Shares are to be placed (the "Placing Price") will be agreed by IP Group and Numis at the close of the Bookbuild. The timing of the close of the Bookbuild, pricing and allocations are at the discretion of IP Group and Numis.

Details of the Placing Price and the number of Placing Shares will be announced as soon as practicable after the close of the Bookbuild.

The Placing is subject to the conditions and termination rights set out in the placing agreement between IP Group and Numis (the "Placing Agreement"). Further details of the Placing Agreement can be found in the terms and conditions of the Placing contained in the Appendix to this announcement.

The Placing Shares, when issued, will be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of two pence each in the capital of the Company.

Applications will be made to the FCA for the Placing Shares to be admitted to the premium listing segment of the Official List of the UK Listing Authority (the "Official List") and to trading on the main market of London Stock Exchange plc (together, "Admission"). It is expected that settlement for the Placing Shares and Admission will take place on or around 8.00 a.m. on 19 May 2015. The Placing is conditional upon, amongst other things, Admission becoming effective and upon the Placing Agreement not being terminated in accordance with its terms.

This Announcement should be read in its entirety. In particular, your attention is drawn to the "Important Notices" section of this Announcement, to the detailed terms and conditions of the Placing and further information relating to the Bookbuild described in the Appendix.

By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this Announcement in its entirety and to be making such offer on the terms and subject to the conditions of the Placing contained herein, and to be providing the representations, warranties, acknowledgements and undertakings contained in the Appendix.

For further information contact:

IP Group plc
Alan Aubrey, Chief Executive Officer
Greg Smith, Chief Financial Officer
Vicki Bradley, Communications

+44 (0) 20 7444 0050

+44 (0) 20 7444 0050

+44 (0) 20 7444 0050

Numis
Corporate Finance: Michael Meade/Freddie Barnfield
Corporate Broking: Oliver Hemsley/James Black
+44 (0) 20 7260 1000

FTI Consulting
James Melville-Ross/Simon Conway/Victoria Foster Mitchell

+44 (0) 20 3727 1000

Notes for editors

About IP Group

IP Group is a leading UK intellectual property commercialisation company, developing technology innovations primarily from its research intensive partner universities. The Group offers more than traditional venture capital, providing its companies with access to business building expertise, networks, recruitment and business support.

IP Group's portfolio comprises holdings in around 90 early-stage to mature businesses across the Healthcare, Biotech, Cleantech and Technology sectors. These businesses include Oxford Nanopore Technologies, the DNA sequencing development company, Revolymer, best known for its removable chewing gum, and Xeros, which has received many accolades for its revolutionary clothes washing techniques with a much reduced requirement for water.

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

To read the full announcement, click here.