Hello, I'm Dan Riddale and welcome to Edison TV. Today I'm joined by Greg Smith, chief executive officer of IP Group. IP Group are a UK-based investment company focused on establishing, building and supporting IP-based companies in the fields of clean tech, deep tech, and health tech. Greg, many thanks for joining me today.
Very nice to see you, Dan.
And can you start by giving us an overview of your 2024 results? You've made some good progress over the course of the year. Can you give us the key highlights there?
Yeah, the things that went well this year, just gone 2024, were we outperformed on realizations. I think we outperformed market expectations and we also outperformed a broader market which has remained challenging for private companies to exit. So we had realizations of about 180 million, which was about five times the level we saw in 2023. So that was very good. I sort of signaled that we were seeing those trends the last time we met for the half-year results. So I was very pleased to see that come through for the full year. That included our record exit, record cash exit, a business called Feature Space, which is a fantastic Cambridge spinout that we were the original investor in, and we exited that business to Visa during the year. The majority of the cash proceeds for that, about 120 million, came in in December, and there's another 15 million or so to come over the short term. Those realizations enabled us to extend our existing buyback program, so we've got a very active buyback program at the moment. We are probably about halfway through an 80 million program, which to put in context would represent us retiring about 20% of our shares in issue. So a really significant program, and given the big discount to NAV that our shares trade at, that represents a really compelling long-term opportunity. I can say it represents a long-term opportunity, and indeed I topped up my own personal position in the group in the recent market turmoil. So, two significant positives I think. The challenge for the year was definitely we saw some downward pressure on the NAV per share. So that was down in the year, and that's the big priority for this year is to return to NAV per share growth. The good news is, having come through two to three years of difficult venture and private markets, although the markets remain still reasonably challenging and the geopolitical situation and some of the changes we're seeing coming from across the pond are not necessarily helping risk appetite, the good news is a lot of the portfolio companies are very well positioned for driving positive growth in the short term. And I think, continued theme that we've spoken about, we're just starting to see some pools of long-term capital, thinking about or actually actively making some initial allocations into the private space. Obviously, that's an area where we have a particularly compelling offer. We work very closely with Host Plus, one of the top 10 superannuation funds in Australia. So, we're well positioned to expand that business here in the UK. So, we look forward with confidence for the year ahead.
Excellent. And you talked particularly about the realizations you've had. Good year for realizations. It looks as if you're expecting that to continue. Particularly, you're targeting 250 million pounds worth of realizations between now, I think, and 2027. Can you talk about that and what's underpinning your confidence there?
Yeah, they often say in venture that the easiest thing is to write the check and the hardest thing is to get it back with a return on it. So it's one of our core KPIs to deliver profitable cash on cash realizations, which we were successful in doing in 2024, and that trend continues to some degree in 2025. At the date of release of our results in March, we delivered about 25 million of exits year to date. We're not anticipating 2025 is going to be as good as 2024. Probably order of magnitude 50 to 70 million of realizations. There's one or two potential portfolio companies. There's one actually that has mentioned its intention to list on the New York Stock Exchange for regulatory reasons. I can't go into too many details other than to mention that Hinge Health has filed its S1. So we'll see how that plays out over the course of the year, and there are a couple of other private businesses. Then between now and end of 2027, there's a really rich pipeline of portfolio opportunities. I think a component of that is going to come from our life sciences portfolio. Again, when we've spoken in the past, I've spoken about the fact that we've got about 10 to 12 companies that are at clinical stage in therapeutic development, and that's quite a nice diversified portfolio as a shareholder. Personally, I think that's quite a nice diversified risk-reward. Many of those companies are going to hit their phase one, phase two, phase three, and often that's the point at which there is an opportunity to either exit or license. So we need one or two of those to come through to achieve that. And then there's some deep tech and clean tech companies that are in the mix as well. So yeah, we think we've got reasonably good coverage of that.
Great. And then looking at your portfolio in a bit more depth, I guess you talked about the headwinds you've got in the portfolio, but equally your core holdings have made some good progress. Can you talk about that balance there?
Yeah. I hope that shareholders would give us some credit, I suppose, for tending to try to bake bad news that we think is coming on the valuation side into the NAV sooner rather than later. And we tend to bake the good news in on the crystallization of transactions. And I think that balance is appropriate for the type of business we run. There have been a number of businesses that have faced some valuation challenges for sure. Oxford Nanopore is unfortunately a great example of that. The business has outperformed its peer set but performed quite in line with its peer set in terms of share price performance. There were some quite good signs in the results this year, particularly around the growth in the applied markets that they've seen, and they announced another big partnership in the last couple of weeks with a subsidiary of Danaher, one of the biggest diagnostics companies in the world. So that's encouraging, and they had a number of partnerships that they announced to add to places like the Mayo Clinic, but also with the NHS and UK Biobank and others. So there's good validation on that front. But I think probably most interestingly, Novo Holdings, the parent company of Novo Nordisk, and Ellison Institute of Technology joined people like Biamera as strategic investors on the register, and I think that's quite important validation of the opportunity they've got. But the share price has been challenged for sure. So that's definitely an example. A couple on the private portfolio side: First Light Fusion, our fusion business, we took a reasonably significant write-down in the value of that. It's still above the cost of our investment, but it's down quite a lot from a couple of years ago. Part of that has been around our quite active involvement. We've got a new CEO in the business, and a little bit like how we worked with Ceres Power to change their strategy to be focused around just the fuel cell and the fuel cell stack rather than all the balance of plant, First Light Fusion is now focusing its strategy on delivering targets and amplifiers around targets that really enable anyone who's trying to use inertial confinement methods to generate fusion to amplify their energy by a factor of 5 to 10. And we had a really good technical result in partnership with Sandia Labs in the US just in the last couple of weeks where they smashed the pressure record on this huge machine, and it opens up new avenues for materials research. And indeed, First Light will have revenues this year, which there are not many fusion businesses that have revenues, but it's something on the journey towards the point at which there is widespread availability of fusion power. That's the big goal, and that could be in 10 years, 15 years, 20 years depending on your view of the fusion market. In the meantime, there's an early revenue opportunity. So that business has seen some impairment, but actually I don't think we've been more excited about the prospects for that business than we are now under Mark's leadership.
