Core investor IP Group could see a major uplift in valuation
Thursday 08 Apr 2021 Author: Ian Conway

Scientific technology firm Oxford Nanopore, which spun out of the University of Oxford in 2005, surprised the market with the recent announcement it is looking to float in London in the second  half of 2021.

The firm, which makes next generation DNA/RNA sequencing technology, says its aim is ‘to disrupt the way that biological analyses are currently performed, and open up new applications that have a profound, positive impact on society’ by allowing ‘the analysis of any living thing, by anyone, anywhere’.

On its website, Oxford Nanopore said it had raised £613 million in several funding rounds since 2005 and was ‘currently well funded for the next phase of corporate development’.

It came as some surprise, therefore, when the firm announced to its shareholders it had started the process of preparing for a potential IPO in London in order to access ‘deeper, international pools of capital’ to finance its growth.

Intellectual property business IP Group (IPO), which seeded the original university spin-out in 2005, is a core investor in the company and holds a 15% stake which its website says is valued at £340 million. On that basis, Oxford Nanopore would have an implied valuation at IPO of £2.27 billion.

However, analysts at investment bank Berenberg believe the business could ‘comfortably’ float for north of £4 billion, according to Bloomberg. That would in turn value IP Group’s stake at £600 million, meaning a 75% uplift to its current value. For context IP Group’s current market value is £1.35 billion.

According to Oxford Nanopore 2020 was ‘a pivotal year’ for sequencing technology. ‘The challenging events of 2020 demonstrated the importance of life sciences in understanding and improving the world around us. Our DNA and RNA sequencing technology is well-positioned for accelerated use across multiple applications.

‘We are still only in the foothills of what is possible; we believe that there is huge potential for near-sample, rapid, low cost, sequencing-based analyses across scientific research, healthcare and industrial settings.

‘These include the long-term potential to provide rapid biological insights in infectious disease, immune profiling and cancer, as well as in food safety, agriculture or other industrial environments.’

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