IP2IPO Group plc ("IP2IPO" or the "Company") (AIM: IPO), the intellectual property company that commercialises university technology, is pleased to announce it has acquired the entire issued share capital of Top Technology Ventures Limited ("Top Technology") (the "Acquisition").
The maximum consideration payable, of £2.4 million for the Acquisition, is to be satisfied in two tranches:
Tranche 1: £800,000 in cash and 172,092 IP2IPO ordinary shares of 10p each (the "Tranche 1 Shares"), payable immediately
Tranche 2: £800,000 in cash, payable on 30 June 2005 (subject to fulfilment of certain conditions)
The sellers of Top Technology, Mr Harry Fitzgibbons and Top Technology Holdings, Inc (a company wholly owned by Mr Fitzgibbons), have undertaken to the Company that, save in limited circumstances, they will not dispose of any of the Tranche 1 Shares for a period of twelve months following the Acquisition.
Information on Top Technology
Top Technology is an investment manager of early stage technology venture capital funds in the UK. It currently manages two limited partnership funds, the first £25 million fund is fully invested; the second, an £18 million fund, has been approximately one third invested.
Top Technology was founded by Harry Fitzgibbons in 1986 and since its inception has focused exclusively on early stage technology investing. As a result of maintaining this focus on early stage investments, Top Technology has developed a distinctive expertise within the UK venture capital industry.
Top Technology generates revenues primarily from annual management fees from the venture funds under its management. Top Technology's consolidated financial statements for the year ended 31 March 2004 show turnover of approximately £1.3 million, a pre-tax return of approximately £250,000 and gross assets of approximately £550,000.
Reasons for the Acquisition
IP2IPO believes that the Acquisition is a positive strategic step for the Company. This transaction is an opportunity to combine IP2IPO's proven ability to create new ventures based on world leading university IP with Top Technology's early stage investing expertise. Following the Acquisition, Top Technology will continue to be managed as a stand-alone business by Harry Fitzgibbons and his team and will not be under any obligation to invest the funds under its management in IP2IPO spin out companies. However, the Acquisition represents a convergence of high quality investment opportunities and experienced venture capital fund management.
The IP2IPO and Top Technology teams have significant experience of working together. Top Technology was itself an investor in IP2IPO's initial round of finance in 2001 and Mr Fitzgibbons served as a director of IP2IPO until June 2004, when he left the Company's board on its announcement that it was in discussions with regard to the Acquisition. Top Technology has also invested in Nanotecture Limited, a spin out company from the University of Southampton in which IP2IPO holds a significant interest.
Top Technology has successfully managed five venture funds since its inception and its fee income has therefore been predictable and its operations profitable. IP2IPO believes that a key reason for the Acquisition is that there is considerable scope to expand the operations of Top Technology in the future by raising further funds.
Related party transaction
The Acquisition is defined under the AIM Rules of the London Stock Exchange plc as a related party transaction as Harry Fitzgibbons, a former non-executive director of IP2IPO, is a director of Top Technology and he beneficially holds 100 per cent. of the issued share capital of Top Technology.
Accordingly, the IP2IPO Board, having consulted with KBC Peel Hunt who have taken into account the Board's commercial assessment of the merits of the Acquisition, considers the terms of the Acquisition to be fair and reasonable insofar as IP2IPO's shareholders are concerned.
Commenting on today's announcement, David Norwood said: "This is a strategic move for IP2IPO. We identified the importance of building a fund management capability within IP2IPO and the acquisition of Top Technology has enabled us to accelerate this significantly. I have tremendous respect for Top Technology's early stage focus and the fit between the two teams couldn't be better."
For more information, view this press release in PDF format. (PDF 19 KB opens in a new window)