IP Group (IPO), the £581m early-stage investor in university spin-off companies, has rejected a bid approach from Railpen, the £34bn railways pension scheme.
Railpen, which has invested in IP Group since 2019 and holds an 18.4% stake, yesterday published an offer of 69.7p per share, including 59p cash, with an additional 5p per share if one of its holdings was sold in the next 12 months.
It said the offer, the outcome of several months’ discussions with IP Group, was part of its ambition to take the company private and scale up the support it provides leading UK science start-ups.
Railpen said its offer, which would allow shareholders to retain IP Group’s stake in gene sequencer Oxford Nanopore (ONT), was a solution to the persistent discount to net asset value at which IPO shares have traded, which reflected its “challenging experience” as a listed company.
It said its offer was dependent on it establishing a consortium of pension schemes to create a world-class venture capital platform around IP Group, which it said “plays a strategically vital role in the UK economy”.
IP Group this afternoon rejected the offer saying it “materially undervalued” the company at a 37% discount to its 110.4p NAV per share at 31 December and pointing out its shares had stood at 70.6p earlier this month.
It confirmed the two sides had “engaged extensively” with IP Group’s board unanimously rejecting three previous offers that had not included the 5p per share element contingent on a sale of tissue regeneration specialist istesso. The first of these on 23 April implied a value of 64.4p per share, the second on 5 May 65.5p and on 12 June a “draft indicative final offer” of 69.5p was received.
IP Group chair Michael Queen said IPO welcomed the support it had received from Railpen over the years, including its engagement with the government’s Mansion House reforms over increasing pension scheme investment in UK companies. However, it was “confident” in its prospects as an independent company but would remain open to any party wanting to build on the inherent value in its portfolio.
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