Science and technology investment firm IP Group (LON: IPO) revealed it had rejected a bid of roughly 69p per share. The bid came from Railpen, acting for the Railways Pension Trustee Company, and was the fourth proposal in recent months.
Scale-up solution
The company’s board has engaged ‘extensively’ with Railpen in the last few months regarding the large discount to NAV. In its last update in March, the firm said NAV per share had risen 13% to 110p by December 2025.
Both parties agree on a need to leverage IP Group’s position to build ‘a scaled, third-party ventue and scale-up manager’. In late 2025, Railpen made clear to IP Group its preferred route to deliver this strategy was to take it private.
However, initially Railpen had neither a clear plan nor the funding required to make an offer. Subsequently, with funding in place, it made two offers around 65p per share, one in April and one in May.
The latest offer, comprising cash, a special dividend and contingent value rights, valued IP Group shares at 69.4p. However, the board said the proposal ‘materially undervalued’ the company and it was confident of its standalone prospects.
We aren’t the least bit surprised IP Group has attracted bid interest, given where the shares are trading. Even assuming no increase in NAV since the end of 2025, the discount looks way too big.
Railpen is clearly a supportive shareholder and wants the best for IP Group shareholders and its own stakeholders. However, it’s going to have to come up with a more convincing offer than the current share price.
It’s also going to have to come up with a less convoluted structure, in our view. Throwing in a dividend for the disposal of IP’s ongoing stake in Oxford Nanopore (LON:ONT) is one thing. Adding a contingent value right based on the sale of a private asset at a predetermined price is far too much of a ‘reach’.
Read the press release here: https://www.ipgroupplc.com/investors
