IP Group - Several potential portfolio catalysts on the horizon

IP Group’s NAV declined by 13% in total return (TR) terms in FY23, affected by continued soft valuations across venture capital (VC) markets, as well as funding delays at some of its holdings. That said, management indicated that many of IP Group’s portfolio companies continued to make strong progress. Its maturing portfolio offers a number of potential NAV triggers and is now available at a wide 59% discount to NAV. We note that, as at end-2023, only 14% of IP Group’s portfolio was valued based

IP Group - NAV expected to decline further in H223

IP Group has released its year-end update, indicating that its end-2023 NAV per share will be in the range of 111p to 117p. This would represent a NAV total return decline of c 7–12% versus end-June 2023 and 11–16% versus end-2022. Management highlighted that this was driven by a further softening of valuations of early-stage companies in Q423. That said, management indicated that many of IP Group’s leading portfolio companies continued to make strong progress and it expects some major inflectio

Hardman & Co Healthcare Index: 2023 – Capital demands dent performance

The Hardman & Co Healthcare Index (HHI) has been running since 2009. Its main function is to highlight the attractions of life sciences investments over the long term. For the second year running, apart from global economic influences affecting world markets, performance in 2023 was dented by the capital-intensive nature of the sector. The HHI fell 3.7%, to 483.8, underperforming the main London markets – FTSE 100 (+3.8%) and FTSE All-Share (3.8%) but outperforming the FTSE AIM All-Share Index (

IP Group - Detailed look at the deeptech portfolio

IP Group has built a commendable portfolio of businesses developing breakthrough technologies, with an aggregate value of more than £200m at end-June 2023 (c 16% of IP Group’s total portfolio value), mostly across four key focus areas: applied AI, next-generation networks, human-machine interface and future compute. Importantly, around 90% of the deeptech portfolio (by fair value) has already started to generate revenue. Both of its two most valuable holdings, Featurespace (adaptive behavioural

IP Group - Remaining on track despite tough markets

IP Group’s private portfolio valuations remained broadly stable in H123, with its c 4.1% NAV decline in total return (TR) terms mostly due to a de rating of listed holdings (Oxford Nanopore, ONT, in particular) and FX headwinds, though subsequently largely offset by a rebound in quoted holdings to date. IP Group’s holding-level liquidity remains firm and 84% of its direct portfolio holdings have a cash runway of 12 months or more. IP Group shares continue to trade at a wide 53% discount to NAV.

IP Group - Deep dive into the life sciences portfolio

We consider IP Group a compelling healthcare play with 31% of its end-2022 portfolio invested in life sciences companies, or 47% including Oxford Nanopore Technologies (ONT). These investments provide exposure to drugs developed for a variety of indications, including different types of cancer, autoimmune diseases (eg rheumatoid arthritis), as well as respiratory and kidney diseases. Investors may benefit from the platform established by management over the past decade and nurtured over many yea

IP Group - Priority companies making progress in 2022

IP Group’s NAV per share came in at 132.9p at end-2022, only 2% below the end-June 2022 level. The NAV decline during 2022 was primarily due to the £428.5m loss from listed holdings (before foreign exchange (FX), mostly Oxford Nanopore Technologies, ONT), while private holdings posted gains before FX of c £101.4m (or 5.8% of opening NAV). Excluding ONT, IP Group posted a £25.2m profit in 2022. Most notably, its four major cleantech holdings posted a valuation uplift of c £120m in FY22. IP Group

IP Group - Focus on high-conviction plays to drive returns

IP Group’s NAV per share came in at 132.9p at end 2022, down 20% year-on-year in total return terms but only 2% below the end-June 2022 level. The NAV decline during 2022 was primarily due to the £428.5m loss from listed holdings (before FX changes, mostly Oxford Nanopore Technologies, ONT), while private holdings contributed gains before FX of c £101.4m (or 5.8% of opening NAV). Excluding ONT, IP Group posted a £25.2m profit in 2022. The company will focus on driving short- to medium-term retur

IP Group - International investor in impactful innovation

IP Group is well-financed and trading at a discount of c 50% to its H122 NAV/share (137p), which we believe represents a compelling opportunity for long-term and impact investors. If management can deliver on targeted average gross returns of 20% for FY22–26 through a renewed focus on its priority companies, we believe IP Group’s discount to NAV would narrow, further lifting average annual NAV/share over this timeframe. IP Group provides liquid exposure to a growing portfolio of high-growth scie

IP Group - Public market falls largely priced in

IP Group has released its H122 interim results, which are in line with guidance given at the end of May. They show an NAV per share of 136.7p, an 18% fall over the six months since FY21 year-end that reflects broader market declines. The reduced NAV was largely driven by falls in the quoted portfolio, principally Oxford Nanopore (87% of £395m decline), with the value of the private portfolio rising by £104m to partially offset the quoted decline. To reassure investors over its valuation approach

Elixirr - Outperforming competitors and the global Consulting market

Elixirr offers investors exposure to the long-term growth trends in the global Consulting market (including digitisation and the ongoing technology revolution, demand for innovation, efficiency and specialised expertise) all turbo charged by the group’s ‘challenger’ strategy driving market share gain from a low base. FY 2023 results showed the power of Elixirr’s differentiated model with revenue up +20% and adj. EPS up +22% in a market subdued by global uncertainty. With net cash of £18m, a posi

Morning Note – 22 April 2024

City of London Investment Group (CLIG LN) - 3Q IMS: return to growth

CLIG’s 3Q IMS reveals 5.5% rise in FuM in the first three months to March 2024 to US$10.1 billion. In the quarter performance added US$302m and group net inflows were US$224m.

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

LIBERUM: MindGym: Delivering on the controllables

SP Angel Morning View: Gold prices slide following profit taking as traders look to US data

Malvern International - Positive results confirm turnaround on track; cash-generative and a strong bid pipeline

A positive trading trajectory for MLVN has continued to emerge strongly in this morning's results, with FY23A revenues standing at £12.2m (FY22A: £6.3m / +79%) and £0.2m PBT profit as against a £1.1m PBT loss the year before (excluding a £94k fair value movement / loan write back). MLVN provides education services including (1) a range of university-related courses for overseas students, (2) adult ELT and (3) summer schools for juniors. MLVN's contract with the University of East London (UEL) st

hVIVO - FY 2023 results, revenue in-line, margin better, future is bright

hVIVO has delivered FY 2023A results in-line with the 30 January 2024 TU, with total customer revenues of £56m, growth of 16% versus 2022A. Other income related to tax credits added another £2.6m. 2024 revenue guidance of £62m has been reiterated, representing 11% growth over 2023A, and ahead of the £60m that we had previously forecast. The company has good visibility with the 2024 figure, with 90% already being covered by the existing orderbook (stands at £80m at the end of 2023), as well as in

The Hardman & Co Monthly: April 2024

Feature article: Steady as she goes, but could be better: A review of investment company liquidity since 2016 Liquidity is the lifeblood of equity markets. The measurement of liquid asset availability to a market or company is a way of gauging a market’s health. This article builds on our previous work, which analysed the liquidity data for non-financial trading companies, by applying the same analytical techniques to the investment companies (IC) space. We analyse liquidity for ICs as a whol

Morning Note – 26 March 2024

Anexo Group (ANX LN) - Key Supreme Court Judgement: No cap on non-whiplash compensation

Key ruling sets out the ability to claim compensation for non-whiplash injuries alongside whiplash claims, without the quantum of damages being restricted by the Whiplash Injury Regulations, supporting the Group’s legal services division Bond Turner in pursing the optimal outcome for the claimants it represents.

Hybridan Small Cap Feast - 14 Mar 2024

Banquet Buffet*** Abingdon Health 9.25p £11.3m (ABDX.L) The lateral flow contract development and manufacturing organisation announces its unaudited interim results for the six months ended 31 December 2023. Revenue increased 117% to £2.4m (H1 2023: £1.1m). The Adjusted EBITDA loss decreased 47% to £1.2m (H1 2023: £2.2m). Furthermore, reduction in operating loss of 50% to £1.2m (H1 2023: £2.4m). The Board therefore expects that H2 2024 revenue will be significantly improved compared with H1 2024

Strategic growth targeting £200m revenues by FY27

We review the potential for the group to push top line revenues towards c £200m pa over the next three to five financial years vs our £135m FY24e estimate. BEG recently issued a Q3 update which confirmed that it is trading in line with market forecasts. Over the last decade Begbies has built an increasingly broad financial services and advisory business that can perform across the economic cycle. We expect recognition of that profile to grow and evolve to reflect recognition of the value inher

Allenby Capital: Franchise Brands - Capital Markets Day

A well-attended and successful Capital Markets Day (CMD) was held yesterday with the theme being “unlocking the Group’s maximum potential and financial targets” with presentations by all Group companies and divisions. Financial targets for the Group have been set for the period from FY25 to FY27 which emphasises the growth that the Board believes the Group capable of achieving. We include these targets in our financial model with the proviso that at this early stage they are more indications of

Hardman & Co Insight - Asset managers had a poor 2022

Asset managers had a poor 2022: the S&P Composite 1500 Asset Management Index was down 22% and, according to the Investment Company Institute (ICI), worldwide mutual funds fell by 20%, from $76tr to $60tr. When bond and equity markets fall, the results are unlikely to be pretty: with revenues trending down and multiples contracting, there is a double whammy to contend with. So how do valuations shape up now, after a bullish start to the new year? The first chart is my favourite chart of asset m