Deal focus: IP Group targets tech commercialization

One out of every 15 scientific research papers published by the nine leading universities in Australia and New Zealand in 2012-2015 was among the top 10% cited in its field globally, according to the most recent CWTS Leiden Ranking. The eight Australia-based establishments alone spend A$6 billion ($4.5 billion) a year on research.

IP Group wants to help them commercialize their findings more effectively. The UK-organization has raised A$200 million in funding to support its expansion in Australia and New Zealand. Commitments came from new investors Temasek Holdings, Telstra Super and Invesco, as well as from several existing backers.

“The universities came over to the UK and looked at how UK universities dealt with the innovation funding gap they were experiencing,” says Peter Grant, managing director for new business and partnerships at IP Group. “We told them that for anyone to succeed you need access to high quality intellectual property and a long-term arrangement with individuals who are going to work with you, because these companies take a long time to develop.”

The A$200 million will be deployed over a 10-year period in spin-out companies based on IP developed by academics at these universities. They are: the University of Adelaide, Australian National University, the University of Melbourne, Monash University, UNSW Sydney, the University of Queensland, the University of Sydney, the University of Western Australia, and the University of Auckland.

IP Group identifies ideas across healthcare, technology, cleantech and biotech at a very early stage – often when the academic makes a first presentation to the university – with a view to making them investable. It backs these start-ups from its balance sheet and provides services ranging from recruitment to accounting. London-listed IP Group might stay invested for 10 years or more, if a particular company is progressing satisfactorily.

The model is well-established in other markets. IP Group entered into its first long-term partnership with the University of Oxford’s chemistry department in 2000 and now has arrangements with 13 leading research universities in the UK and five in the US. As of December 2016, the organization had equity and debt interests in 90 start-ups and its cumulative investments were valued at GBP614 million ($793 million).

The portfolio includes Diurnal, which started out as a patent developed at Sheffield University in the UK. IP Global helped license the IP to a drug developer, and when the buyer went bust it bought back the asset. Twelve years on, Diurnal is conducting stage-three trials on its first treatments, is listed on AIM and valued at approximately GBP67 million ($86 million).

“This isn’t a VC-type model, we are involved with all our companies on a day-to-day basis,” says Grant. “We are not there to make a quick return. We are seeking to build dominant technology plays, which takes a long time.” 

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