IP Group is hoping to raise $260m as the firm reveals it has made a takeover bid for Touchstone Innovations and will establish a new subsidiary in Australia.
UK-based commercialisation firm IP Group, winner of the GUV Award 2017 for Investment Unit of the Year, announced on Tuesday that it had approached the board of its peer Touchstone Innovations with an acquisition offer that valued the latter firm at approximately £500m ($650m).
Touchstone Innovations focuses on spinouts located in the golden triangle of London, Cambridge and Oxford. It also, through its Imperial Innovations unit, acts as the technology transfer office of Imperial College London.
Touchstone’s board rejected the offer, but engaged with IP Group on the behest of some shareholders.
IP Group has secured the backing of shareholders representing, in aggregate, 51.8% of Touchstone’s issued share capital, including Woodford Investment Management and Invesco Asset Management – both of which are also IP Group shareholders.
If the merger goes ahead, Touchstone shareholders would initially own 38% of the combined entity – though if IP Group is successful in securing £200m through its planned placing of new shares, that would be diluted to 33%.
Rules of the London Stock Exchange mean IP Group now has until 5pm on June 20 to make a formal offer or announce that it has decided to not go ahead.
While IP Group has obtained the backing of a majority of shareholders, others have voiced their concern. David Kneale, head of UK Equities at Mirabaud, which holds a 1.3% stake in Touchstone, told the Telegraph: “Touchstone has a portfolio of diversified, well managed, well developed and rapidly progressing businesses of tremendous potential. The valuation basis on which these investments are held appears extraordinarily conservative.
“There are several which we believe to be worth many multiples of their current carrying values; backed up by recent commercial contracts potentially worth hundreds of millions of pounds.
“We were very pleased to see the board reject the approach and commit to protecting the interests of all Touchstone stakeholders and shareholders.”
An informal poll at the GUV:Fusion conference in London yesterday revealed that the vast majority of delegates would, if they were Touchstone shareholders, reject the bid with the argument that the UK ecosystem would not benefit from consolidation.
IP Group’s placing of £200m worth of new shares meanwhile will go towards a newly created subsidiary in the Australian state of Victoria, IP Group Australia, which has signed agreements with a total of nine Australia and New Zealand-based institutions.
The partners are Monash University, Australian National University, University of Adelaide, University of Melbourne, University of Queensland, University of Sydney, University of Western Australia, University of New South Wales and University of Auckland.
Part of the money would also support IP Group’s existing operations in the UK and in the US. The board has the ability to increase the placing by £66.6m in case of high demand.
Investors expected to participate in the placing include existing backers Invesco, Woodford and Landsdowne as well as new parties, including Temasek, the sovereign wealth fund of Singapore, and Telstra Super, the superannuation fund for employees of telecoms firm Telstra.
