IP Group Plc (IPO) Earnings Call Transcript & Summary

Good morning, everybody. Welcome to this webinar on our interim results for the period ended 30th of June 2021. My name is Alan Aubrey, and I'm the CEO. With me today, I have Greg Smith, who is our CFO. Greg, unmute and say hello or just give a wave.

Good morning, everyone.

There you go. You see we've coordinated with backgrounds and shirts this morning. So let me start by explaining the format of this webinar. In a minute or 2, we will play a prerecorded video, which lasts for about 22 minutes, and this video covers a presentation by me on the key aspects of the interim results. And after that, we'll come back to a live Q&A hosted by Greg and I. And you can ask questions via the Q&A facility in Zoom. The webinar is scheduled to finish at 11, so we'll have about 30, 35 minutes or so for questions. And if we run out of questions before that time, we will finish early. And if we have too many questions, we'll try and consolidate some together into theme, so we finish on time. And at the end of the webinar, we're going to finish with a 3-minute video featuring some of our portfolio companies and their reflections on their relationship with IP Group, and we're releasing this video to coincide with our 20th birthday, which -- the official 20th birthday, I think, it's actually this week. And -- so anyway, without further ado, let's play the video on the interim results. Hello. Welcome to this presentation on our interim results. I will cover an overview of the period, give a brief recap on our purpose, vision and strategy, highlight the key aspects of the results and the performance in the portfolio and then finish with a recap of the key points. And so let's start with an overview. 2020 was a record year for IP Group, and this trend continued into the first half of 2021. We achieved a return on net assets of 9% or 18% on an annualized basis and GBP 111 million of realizations. And we ended the period with a healthy cash balance, and that has enabled us to declare our first interim dividend and also announced this morning a GBP 20 million share buyback program, and I will talk more about that later. Our portfolio companies raised GBP 1 billion, the first time that this milestone has been achieved in any 6-month period, and we invested GBP 70 million out of that GBP 1 billion. This success reflects the alignment of our portfolio to structure growth themes, human health, the transition to net zero and digitization. So let me briefly recap on our purpose, vision and strategy. Our purpose is to evolve innovation in science and technology into world-changing businesses. Our aim is to achieve a positive and measurable impact on society and the environment alongside an attractive financial return. And we do this by providing the access to the capital and support that these scientific innovators and entrepreneurs need to navigate that tricky journey from innovation to scale up and impacts. And the problem we address is the difficulty these businesses experience in accessing the capital and support to make this journey, because although the rewards can be huge, the risks are substantial and the time lines often long. And these factors combined make it difficult for many investors to back these opportunities. For example, the time from inception to scale can often be more than 10 years. And this means that funds that have a fixed life such as a 10-year venture fund cannot fund the early years. However, the multiple funding rounds involved means that investors who can fund in the early years find it difficult to do so because of the risks of being heavily diluted before you hit that kind of hockey curve value accretion stage. And funding these opportunities through an evergreen structure such as a plc balance sheet can mitigate these risks and generate economic value through the creation of companies that might not have otherwise existed. Such a vehicle can also follow its money through to scale up. But being quoted, particularly at scale, can also provide liquidity to shareholders. Our vision is an ever-growing alumnus of self-sustaining successful impact companies that we help to create and sustain companies that may not have existed without us. Our financial returns will, of course, be measured by conventional metrics such as return on net assets, but our impact returns will be measured by the impact that these companies achieve in the world. Of course, any individual company in our portfolio is high risk. But through portfolio management, we offer investors diversified exposure to a portfolio of private companies focused on critical structural growth themes. And our strategy is to maintain a balance between diversification and focus, and we achieve this balance by operating 7 business units or funds that focus on a key sector or key geography or funding stage. So let's look at an overview of the group. On 30th of June '21, these business units managed GBP 1.25 billion of our own assets and GBP 0.5 billion of third-party assets as set out on this slide. It's worth noting that 90% of the balance sheet assets are managed within 3 funds, Life Sciences, Strategic Opportunities and Deeptech, whilst 80% of the third-party assets are managed within our wholly-owned subsidiary company, Parkwalk. Because of its size and significance to the group, we hold our stake in Oxford Nanopore in the global strategic opportunities funds. Our business units have the flexibility to manage third-party capital and bring in, if necessary, third-party investors alongside our balance sheet capital where we consider it advantageous to our stakeholders to do so. For example, on 30th of June '21, third-party investors held approximately 40% of our U.S. platform. And this strategy has allowed IP Group, Inc., to build critical mass in the U.S. without the need for our shareholders to provide all of the capital. Moving forward, I would expect the proportion of third-party assets under management to increase maybe to near 1:1 in the first instance. And this will help the company achieve its purpose, build critical mass in our chosen sectors and geographies, generate income for the group. I'd like to say a few words now about ESG and impact to invest. 2020 saw record capital inflows into ESG funds, and this trend is expected to keep growing. The global pandemic has, of course, disrupted just about every facet of our lives, and of course, has exposed many shortcomings in our economic and social systems. And by extension, the pandemic has also had a profound impact on ESG investing as there is now a heightened sense of awareness and urgency to combat climate change and social inequality. There is a strong natural alignment between the group's purpose and impacts. And in recent years, that's been articulated by assessing the impact of our portfolio against the UN's Sustainable Development Goals or SDGs. However, we continue to focus on improving our own performance in broader ESG issues, and we will highlight some of these improvements in our second annual ESG report, which will be published shortly. Now this business is about the long term. And so I'd like to spend a few moments highlighting the long-term trend in performance in hard net assets per share, in particular compared to our share price. Our hard net assets comprises mainly cash and portfolio divided by the number of shares and issue at any point in time. The orange line here shows our share prices the company came to market and the blue line shows the growth in that net asset value per share. And net asset value per share over that period has grown nearly 6x or over 11% cumulative since IPO, dipped in '17 to '19, which largely reflects the onetime dilutive impact of the Touchstone acquisition, which now return into that trend line. Looking forward over the medium term, we expect net asset value per share to continue to grow at a double-digit rate, and that will comprise most of the total shareholder return. Cash returns in the form of dividends and share buybacks will also comprise a smaller but valuable element. Turning now to the results and the increase in net asset value per share in the period. This slide shows the bridge from the hard net asset per share, it's 125p in December to 135p at June. And this increase reflects strong performance in our 2 biggest business units, Life Sciences and Deeptech, and I'll come back to the underlying reasons for this later in the presentation. But turning to our cost base. Overall, net overhead has continued to fall and costs have been well managed in the first half. Net overheads were just under 1.5% of assets under management. This reflects flat overhead and an increase in fee income that Parkwalk offset by an increase in the accrual for performance-related pay, which is known as the annual incentive scheme or AIS. And staying with Parkwalk for a few moments. This business also had a successful first half. And you'll recall from the group overview slide that Parkwalk manages 400 million of third-party money, 80% of all the third-party funds in the group. And presently, this comprises EIS funds, and the company is indeed the market leading growth EIS manager. And as you can see from this chart on the top left of this slide, our assets under management have grown consistently over a period of time. However, looking at the chart in the top right, the net contribution to the group fell dramatically in 2020, and that reflected the fact that the first lockdown coincided with the end of the tax year, and this had a knock-on effect on the whole EIS market. Going forward, the company is planning on raising its first institutional fund positioned as a follow-on fund, and we have committed GBP 50 million to that fund. Moving on to net assets. The left hand of this slide shows net assets at June compared to net assets at December 2020. And as in previous years -- in previous periods, it's a very simple balance sheet with these 3 main components: portfolio, cash and then long-term loans. At June, the hard net asset value was GBP 1.4 billion or 135p per share. And that donut on the right shows how that 135p is made up. So the top 6 companies in the portfolio equate to 54p, the top 20 to 83p and the top 20 plus cash, 101p. Or in other words, that top 20 plus the cash, 75% of that 135p. I'll refer to that GBP 1.25 billion portfolio value later in the presentation, so keep that number in your mind. But turning now to cash flows. This slide reconciles the opening and closing cash. The big movements on the right-hand side of this slide, those realizations of GBP 111 million and investment in the portfolio of GBP 71 million. However, it's worth highlighting GBP 26 million of funds raised into the U.S. business and the dividend payment of GBP 11 million. We continue to reduce our term loans in accordance with plan. So net cash doesn't show the same increase, but it's still down over -- still up over 23% in the period. I would now like to comment more on our capital allocation framework. This is the set of policies we have for how we allocate balance sheet capital. These recent realizations have left us in a strong position. And understandably, we've continued to have quite a few questions about our intended use of capital. And the answer is that we will deploy capital according to this framework, which has 3 key priorities. Firstly, to support organic growth across our business units. Here, we're seeking to achieve long-term growth in net asset value per share alongside impacts. And we anticipate that most of our capital will be used for this purpose, i.e., for organic growth. Secondly, to manage our gearing to ensure that our service requirements are always net. This is currently a commitment of less than GBP 20 million per annum. But then finally, to return any excess capital to shareholders. In the last 2 years, the group has generated significant cash, and we expect cash generation to remain good, albeit lumpy over the coming years. And whilst we will reinvest those proceeds in growth opportunities, we also recognize the benefits of a cash element to total shareholder returns. The 2020 year-end, we introduced a progressive dividend policy, and we are delighted to continue that at the half year with our first interim dividend of 0.48p per share. And we've also announced this morning that we are allocating GBP 20 million for the purposes of buying back our own shares. Such shares will only be purchased at a discount net asset value. And of course, we will update the market on any relevant transactions in this regard in the normal way. If there continues to be excess capital, for example, if there was a very large realization which cannot be reinvested in growth opportunities within a reasonable time frame, we will look to return this to shareholders as quickly and as efficiently as possible. Turning now to the balance sheet portfolio, which you may remember from the net asset side. It was about GBP 1.25 billion. I asked to keep in your mind. As explained earlier, this is primarily managed in 6 separate business units or funds and 3 sector-focused business units; Life Sciences, Deep Technology and Clean Technology, a group-wide Strategic Opportunities fund which mainly comprises our holding in Oxford Nanopore; and then 2 country-focused funds in Australia, in New Zealand and the U.S. Turning to the donut on the right. As usual, the portfolio is quite concentrated with the top 20 companies representing 76% of the value of the portfolio. In terms of contribution, the bars on the bottom of the chart show contribution by business unit with, as I explained before, Life Sciences and Deeptech having performed particularly strongly in the period. Let me just say a few words now about our top 20 holdings. This chart shows the value of these holdings as of 30th of June, together with the fair value movement in the period, and those movements in fair value are shown by the positive moves by the dark green bars. I'd like to highlight 4 significant transactions in the period. The first 2 are complete realizations, and so the companies no longer feature in our top 20 holdings. These are shown in the table at the top right hand of this slide. In May '21, the U.S. social media giant Snap acquired WaveOptics for a consideration in excess of $0.5 billion, which we believe to be one of the largest ever venture-backed Deeptech exits in the U.K. This led to an uplift of GBP 24.6 million in the value of our holdings. The consideration was split in 2 equal tranches, the first of which was paid on completion in May and the second will become due 24 months from completion. The first tranche of consideration was paid in Snap shares, and we sold these shares shortly afterwards at a premium to their issue price delivering cash proceeds of GBP 29.4 million. Also in May, we announced a GBP 30.7 million gain from the sale of Inivata to NeoGenomics, returning GBP 64.6 million in cash to the group. And then turning to the chart on Centessa, which is the fifth company in from the left. Here, we rolled up our holding in a company called ApcinteX into a new company called Centessa Pharmaceuticals, which then floated on NASDAQ in June valuing our 2.8% stake at GBP 40.6 million and providing a GBP 21.5 million uplift. Earlier in the year, Centessa had carried out a GBP 250 million oversubscribed crossover round and then raised a further GBP 380 million out of IPO. Two companies to the right of Centessa, number 7 is NASDAQ-quoted Athenex. This holding arises from the same portfolio company Kuur Therapeutics to Athenex [indiscernible]. And so we now own approximately 11% of Athenex. I'd now like to say a few words about Oxford Nanopore. This company continues to perform very well, is enjoying very strong growth in its core life science research tools business, as indicated in the first half of 2021. Revenues in this core business would have grown greater than 80% year-on-year. The company also benefited from revenues from COVID testing, although these are not core business, and we are assuming they won't continue beyond this year. The company remains very well funded, having raised GBP 202 million in new capital during this period, including GBP 125 million from new investors; Temasek, Wellington Management, M&G and Nikon. And there are many factors driving this growth. However, I thought it worth highlighting 2. Firstly, the significant progress of the company's PromethION device, which provides sequencing data at very high throughput. This will be a key driver of future growth. And in the period, the company announced several high-profile projects in this area. In May, the NIH in the U.S. purchased PromethION to support research into Alzheimer's and related dementias. The researchers are seeking to generate long-read nanopore sequencing from roughly 4,000 patients with Alzheimer's disease. Genomics England also recently announced that they will sequence thousands of human genomes using PromethION in a project that will evaluate its potential to provide rapid, rich insights into cancer genomics. And finally, the PromethION has been used on the ambitious Emirati Genome Programme in the UAE. Although this project was announced in late 2019, it really started to scale this year because of the pandemic. And secondly, of course, higher profile for a general audience. Nanopore is playing a critical role in the world's epidemiological response to COVID-19 and is being used in over 80 countries for this purpose. As an example, in June, The Rockefeller Foundation announced over $20 million in funding and the establishment of a new pandemic prevention institute to help strengthen global capability in this area. Oxford Nanopore is 1 of just 20 organizations collaborating with The Rockefeller Foundation on this initiative and to expand global sequencing capability. And the aim is to identify disease outbreaks early and stop their spread within 100 days. And let's hear this 2-minute video from Dr. Rick Bright from The Rockefeller Foundation explaining this initiative. [Presentation]

So I'd now like to summarize. In 2020, we achieved record financials, and this trend continued in the first half of 2021 with a return on hard NAV of 9% and GBP 111 million in realizations. And this has allowed us to evolve the business to a new level and distribute some of these realizations to shareholders. Today, we have declared our first interim dividend, and we've also announced an allocation of GBP 20 million for a share buyback program. IP Group celebrated its 20th anniversary in 2021. For 20 years, on behalf of our shareholders, we've been backing radical innovators in science and technology impact investing long before it became a popular term. And our portfolio has made great progress in 2021 and is very well positioned to benefit from these structural growth themes such as human health, the path to net zero and digitization. Companies like Nanopore have demonstrated the impact and returns that can be achieved by backing world-class science and taking a long-term supportive approach. On behalf of our shareholders, we also reinvested GBP 70 million of our money in the period into world-class science. And we look forward with confidence to updating everyone on both the impact and the financial returns that this investment will generate in the coming years. And I will now leave you with our usual caveats, which can also be found on our website. Thank you.

Well, hello again. Welcome back, everybody, to the Q&A. So what's going to happen, I'll act as the sort of compare and divide questions between Greg and I. As is traditional, I'm going to use the CEO provision and throw 3 questions to Greg, so get ready, Greg.

Okay.

And by all means, keep questions coming as we go through the initial batch of questions that has come through. So the first question I am going to pass to Greg, and the question is, can you give further details on the share buyback program? In particular, how will it work? And what discount will you buy at? Greg?

Thank you. Sounds like a fair one for me. So as Alan mentioned in the presentation, for the first time, we've now allocated GBP 20 million of our capital to buybacks, and that forms part of our overall approach to total shareholder returns. Those of you who remember from the AGM will remember that our AGM authority enables us to buy back shares in circumstances where doing so is accretive to NAV per share. So only when our shares are trading at a discount to NAV. So the use of that GBP 20 million of capital will obviously depend on a few factors. There are the usual regulatory considerations. For example, we can buy back while there's inside information, but due to other practicalities we'll use a broker to buy in the market subject to volume and price requirements. And in terms of that specific question on the discount, we don't have a formal discount target. And in fact, we believe that announcing a specific target could hinder rather than help the execution of buybacks. But obviously, we will look to be consistent with that plan to be accretive to NAV per share. We will update the market as and when this capital is used via the usual channels of RNS.

Okay. Thanks, Greg. So moving on to the second question we've had, which is when will Nanopore do its IPO? And what will you do with your shareholding after IPO? So I'll take that one. For those, I guess, most of you on the call will be aware of this, Nanopore announced a few months ago that they had started the planning with a view to doing an IPO in the second half of 2021. The first thing I'd say, it's obviously fantastic that the company is doing so well. So hats off to those guys. They're doing a kind of fantastic job. And the second thing to say is we remain very supportive with the Board's plans. I mean I think you'll understand, we're not able to kind of comment on the IPO. It's a matter of the Board and Nanopore. We're not able to comment any further on those plans other than what they have put into the public domain. So I can appreciate that's frustrating for people, but I'm sure you can all understand the reasons why it's not our place to comment on those plans in any detail. In terms of our shareholding in IPO, again, we can't -- it wouldn't -- these are matters that are governed by regulatory requirements, so we're not in a position to sort of speculate on what we may or may not do on a kind of event that may or may not happen in the future. Again, so we can't really comment any detail on that. So let's kind of move on to the next question, which is a bit of a technical question, so I'm going to push this one to Greg as well. And the question is the loans from limited partners of consolidated funds circa GBP 26 million in the operating cash flow, can you help us understand better what these are and what the payback terms timing is?

All right. Good question. I'll try and keep this as simple as possible. So basically, this is a quirk of consolidation accounting. So where we have external investors in funds alongside us, and where those funds are structured as limited partnerships, which is not uncommon. And then when we produce our group results, we bring into our balance sheet the assets, i.e., the holdings in the portfolio companies and also the loans, which is how capital is sort of typically provided through limited partnership structures. In terms of repayment, there's no fixed date or profile. It's not like our term debt with the EIB. The idea is or the mechanism is that those loans are only repaid from proceeds from sales of the underlying portfolio companies in that particular fund. And the GBP 26 million this year positive in our operating cash flow, that predominantly reflects the capital that our U.S. business, IP Group, Inc., raised during the period. So you'll note that we noted that there was about $60 million of capital committed to that business, and they draw that down as needed, part funded by us and part funded by external LPs. So you should -- it's a bit of a quirk of the accounting, but that's why that was in there.

Okay. Thanks, Greg. Next question is about the allocation of cash and capital. So if I say a few introductory remarks, then again, I'll hand to Greg to describe the process. So the question is, quite a long question, so get yourselves ready. Now that you're in the strong position, having a very sizable cash balance, can you give us a deeper insight into the capital allocation discussions that the Board has? How do you think about the allocation to new projects, further investments in existing assets versus buybacks versus dividends? Would be great to get your latest thinking. Thank you. So if I could say a few comments. So as I described in my presentation, we have these essentially kind of 6 business units; 3 focused on key sectors, which Life Sciences, Deeptech, Cleantech; and then 3 focused sector agnostically but on countries, which is the U.S., Australia, New Zealand and Parkwalk in the U.K. All of these business units have fantastic opportunities. And so we sit down and allocate capital across those business units as is appropriate. The business units themselves are responsible for getting the balance right between backing new projects and backing existing projects. A couple of things I would sort of highlight in particular. First is Life Sciences. I mean there's an amazing opportunity in Life Sciences. If you look at the kind of the life science industry across the world, 30% of the top 50 life science universities in the world are in Europe. And yet, on average, European biotechs have access to 1/6 of the capital available to their counterparts in the U.S. So quality of science in terms of citations, patents is as high, but the capital isn't there. We've managed to build critical mass in life sciences, and we've built a portfolio that is at a really kind of key inflection point. So we see major opportunities to push on in Life Sciences and the leading player in providing that kind of capital in Europe. And then the second area that I emphasize is Cleantech. I mean Cleantech was 5% of the total assets, you saw on one of those earlier slides of the total. But that's hardly because they exited some of their bigger opportunities like Ceres last year. And so we do envisage backing more new projects in Cleantech, and we see a major opportunity to back science-based businesses that are fundamental to that net zero transition. And we have one of the best performing and longer-standing climate tech teams in Europe. And so we see that is a kind of major opportunity going forward. So those are the 2 I would highlight in particular. But Greg, do you want to say a few more comments on the actual process we followed?

Yes. So actual process, I mean, as you'll imagine, this is a core part of what we do as an executive committee and a Board, and capital is one of our most important resources. And so it takes up a lot of our thinking time and getting this balance right between those 3 capital priorities and our framework is going to be a big driver of how successful we are in delivering our strategy and our business model. I think as I've commented in previous years and the process is probably, as you'd expect, we look at 3 to 4 years across the portfolio across those business units. The business unit heads have plans for balancing their mature assets and new opportunities and we look at 3 things. We look at the available capital that we have now. We look at our funding sources which are luckily at the moment recycling capital from successful execution of the strategy. But obviously, you have to risk weight realizations because the sort of experience has tended to show us that they can be a bit later than planned and some of them don't come off as planned. And then we do the same thing on our investment requirements as well. So we allocate those. So we have a top-down and a bottom-up process. We review that formally on a full year basis, looking at about 4 years. And every quarter, the senior team meets and goes through those forecasts and makes any adjustments as necessary. And so I think what I hope shareholders will see is a consistent approach to generating that double-digit return. The majority of that will be by way of capital return. And so you should expect to see us reinvesting the majority of capital that we realize. However, partly to deal with the historic volatility in our share price that we've seen around NAV per share, we do think a cash component or a distribution component is an important part of the overall TSR for an IP Group shareholder. So we'll continue to balance that appropriately. So I hope that gives a bit more color. And then in terms of the -- how do we think about the level of capital going into new opportunities, sort of new opportunities in a given year. Remember, the IP Group model is to start backing things very early in their life cycle. And so typically, capital into new things is a very small proportion of the overall capital in any given year. And I included a stat in the half year results where more than 90% of the capital that went into the group's portfolio in the U.K. was into companies that are either in the top 20 or focus. And so typically, they're older than 4 years. I mean that's just a natural part of how we seek to deal with the time lines involved from a capital point of view. So I hope that gives a bit more color.

Okay. Thank you, Greg. So I will take the next question. It's a 2-part question. So part A is what has gone wrong with LamPORE? Has the government abandoned use, et cetera, that's related to Nanopore? And then part B is, are you still confident in Nanopore given that it will not turn a profit for 5 years? So the first part of the question is a reminder, LamPORE was a diagnostic test that the Nanopore developed for the diagnosis of the presence of COVID-19. So this is not sequencing genome. So it's not kind of -- it's not identifying strain variance, for example. It is merely detecting the presence or nonpresence. Company developed that last year and sold tests to the U.K. government. The short answer is -- it's not a short answer. The test works -- the test is really good, works well. It sat between kind of PCR and lateral flow. So it was far more accurate than lateral flow and was more scalable than PCR. Essentially, what's happened is there is a sort of surplus of PCR testing capability at the moment. And so we always envisaged it would be a one-off kind of revenue stream for COVID-19 testing. Obviously, the company is benefiting very substantially from a genomic analysis of COVID-19 with one of the concern on various strains. So it continues to benefit from that side of COVID-19. And the intention was and still is that the LamPORE test and the platform will be developed for other diagnostic tests, which will take longer to come through because of the regulatory requirements to get diagnostic tests approved. So that's the answer on LamPORE. Are we still confident in the company given that it won't make profit for 5 years? Well, the answer is yes. I mean the company is growing very strongly. And if you look at the comps and what drives the valuation of the comps, it tends to be 2 metrics, in particular, revenue growth and gross margin, because that gives the sort of the concept that people can sacrifice profits in the short term in order to gain market share. And if you have a high gross margin and high revenue growth, then the path to profitability is more easily executable, and there's a far bigger benefit to be gained from growing your market share. And so that's the position Nanopore was in. So we believe that the market will recognize that because that's how they value all the comps. And so that's the kind of right strategy for the company to follow. So that's the answer to that one. Just moving on. The next question is -- I'm going to give to Greg. What do you think is driving the discount to net asset value of the share price?

Well, yes, that's a great question. And I suppose one answer is the directors shouldn't have a view on the share price. But obviously, we do look at it. And what's driving the discount? If you look at the history Alan showed in the presentation, and we've shown this for the last sort of 5 or 10 years of our presentations, we've grown our NAV per share -- our assets per share on a relatively consistent basis at about 11% per annum over that period, but the share price has been very volatile, and this is not an unusual thing for companies such as ours. And if you look back to 3i in the '80s and '90s, they saw a similar phenomenon, perhaps a bit less as pronounced as for us. And so that's something that we are aware of and could be a bit of a challenge for some institutions to hold our stock, hence, the evolution of our approach to total shareholder returns. And in terms of why investment companies trade at a discount to NAV, there's a whole lot of research and academia on why this may be the case. Part of it can be down to market cycles. If people are anticipating our NAV is going to go down in the future, then it trades at a discount. And if people anticipate it is going to go up, then it can trade at a premium. There's liquidity and how liquid the underlying portfolio is. And so while it's not our job to manage a discount, we are mindful that a discount that gets too wide and is too volatile compared to our NAV per share is something that we should be involved in, in sort of looking after. So yes, I mean, I think the brokers and the market will have a view on why or why not the discount may or may not be there and we should trade sort of with NAV as an anchor is my belief.

Okay. Thank you, Greg. Next question is, can you give some detail on how exclusive your agreements with your named universities are? i.e., do you have first dibs on any start-ups? Or how does it work? Yes, this is an interesting question. I mean the -- and I probably date back to when -- 10, 15 years ago when IP Group sort of started. We did have a number of exclusive agreements with universities which were kind of fairly straightforward. There was a seed fund to each university and that seed fund provided seed capital to viable spinouts from each of those universities. We've migrated that model over that period. It's kind of richer now. So the way we source product is kind of richer than that simple model back in the day. So for example, the 3 sector teams have their own proprietary relationships and knowledge of where key science fundamental to what they are trying to achieve is. So if you looked at the Cleantech pipeline, you will find very deep insight into each of the propositions on that pipeline, but those propositions may not come from our own partner universities. So we found that kind of sector-based approach is better on the whole than the universal partnership model because the downside of the universal partnership model was you sort of really have to back every viable spinout rather than just really kind of premier one. So we use those sector teams to effectively cherry-pick key bits of research that they have strong hypotheses on. And then in addition to that, we've also got Parkwalk who run EIS funds at leading universities like Oxford, Cambridge, Imperial. And as I mentioned in the presentation, Parkwalk now are looking to launch their own scale up fund, which will be in a position to invest in the best of those spinouts that have come through the EIS funds. And we have committed to be an anchor investor in that sort of scale up fund. So that's another different sort of method of getting exposure to the spinouts. And then the final point is in the overseas territories, it's slightly different again. So in the U.S., they focus on 6 or 7 key Ivy League universities, Yale, John Hopkins, Penn, Princeton, but they don't have exclusivity. But in reality on the ground, they're one of the key operators in those regions. And then finally, in Australia, they do have more of an exclusive arrangement with the 8 lead universities there. And that's kind of very good because that business is at the stage the U.K. business was 15 years ago. And so there is more logic in that exclusivity because it helps build critical mass with limited competition in its early years. So that's the answer to that question. I'm going to give the next question to Greg, which is, do you think that the very long time line for start-ups to mature to something worth a multiple of cost has shrunk in recent years due to tech advances so your IRR will improve in the future?

Yes, if you want sort of a question that drives you towards a forward-looking statement, that's certainly one. I mean in terms of trends, it obviously differs from sector to sector. What's clear and people have paid any attention to the sort of the financial press or indeed the wider press over the last sort of 18 months, there's been a lot of talk of acceleration in various trends that we've been following and investing in for a long period of time; digitization and human machine interface, even the remote working and also human health. And of course, the amazing things that we've seen in terms of development of new viral treatments for disease is making biotech companies look at the development time lines and work out what it means for the whole sector. A lot of the big shifts -- and again, this is a trend maybe that's accelerated but was an existing trend in software and companies that are less based on deep technology and IP, they can see sort of quite rapid increases in value. Most of the companies that we back are fundamental science, creating a product or a service based on IP. And so the time lines are slightly longer there. But hopefully, you've seen, in the recent past, in the last 18 months or so, some quite rapid value accretion even in the Life Science businesses as those companies either partner and will hit successful milestones and will indeed get acquired. So will our IRR improve in the future? We're certainly confident of the business model, delivering double-digit returns, and we plan for more than that and hope that we can share that success of both financial return and very impactful companies with shareholders and our stakeholders into the future.

Thank you, Greg. I'm going to give you the next question as well, because it's a little bit of a tech one. In case you need some -- no, sorry, what is the intended split on the dividend between half year and full year? And what sort of dividend growth do you anticipate?

Well, we've obviously only done 1 full year dividend and 1 half year dividend. So sort of indicating our intentions for growth, there's a very small data set so far. Typically, the dividend interim to final split is something like 50-50 or 40-60. And so you should expect something similar from us. In terms of our plans for the dividend, we have said it will be a modest component. I don't have any intention to try to turn IP Group into a yield stock. That's definitely not what we're trying to do, but we started from a modest GBP 0.01 a share, and we do want to have a progressive dividend strategy where that increases over time. And so by the time of the full year, you'll see whether it's sort of 50-50, 40-60, but you should see some growth in the dividend expected for the full year.

Okay. Thank you, Greg. I will take the next one, which is, can you please comment on your thinking about portfolio concentration, particularly with respect to ONT? More specifically, how sensitive are you to IP Group potentially viewed as an ONT proxy, especially in case of a successful IPO of ONT? Well, I can think of many things worse in the world than being viewed as an ONT proxy. Having said that, it is a sort of a fair point. We see ONT as an exemplar of what you can do by backing high-quality, disruptive science and -- over the long term, and we certainly have no intention of being an ONT proxy over the medium term. That said, we obviously want to -- we don't ensure we get a proper value for our stake in ONT. So yes, that's the way to handle it. So sort of over time, in the short term, that's possible. But in the long term, we see our job to create more ONTs. And as I described earlier, we see amazing opportunities across all of our business units, particularly in the short term in Life Sciences and around the transition to net zero. And no, we don't intend to be an ONT proxy in the long term. Good. Okay. I think that is all. Well, we have answered all the questions. We'll just kind of wait a few seconds to see whether anybody has any kind of final questions. Right. In which case, I thank you all very much for your participation and your kind of questions. And we'll finish with the final video on 2021 and reflections from some of our portfolio companies, both past and present. Thank you all very much, and have a great day.