IP Group (LSE:IPO) shares rose more than 8% on Tuesday after the UK-based science investor reported a 13% increase in net asset value per share for 2025, supported largely by gains tied to Pfizer Inc’s acquisition in the obesity drug sector.
Net asset value per share climbed to 110.4 pence as of Dec. 31, 2025, up from 97.7 pence a year earlier. The increase followed the recognition of £128.2 million in licensing income after Pfizer agreed in November to acquire weight-loss drug developer Metsera in a deal worth up to $10 billion.
The financial boost also triggered an unexpected accounting shift. In December, IP Group reclassified itself as an “investment entity” under IFRS 10 standards, changing the way its subsidiaries are consolidated within the group’s financial statements.
That adjustment led to a technical breach of covenants tied to the company’s £120 million private placement. Noteholders defined qualifying cash as funds held solely at the parent company level, whereas IP Group had previously included cash held across the wider group structure.
At the end of the year, the company held £87.8 million in cash equivalents and £123.2 million in deposits, but not enough of those funds were held directly by the parent entity.
The group secured a waiver from noteholders and subsequently transferred cash to the parent company. However, the covenant breach required £119.7 million of borrowings to be reclassified from long-term to current liabilities.
Despite posting a profit of £66.9 million compared with a loss of £207 million in 2024, and holding gross cash of £211 million, IP Group’s shares continue to trade at a steep discount to net asset value of nearly 47%.
The stock ended 2025 at 58.6 pence versus a NAV of 110.4 pence. Management acknowledged the gap, noting that the company completed a £75 million share buyback during the year, retiring roughly 9% of its outstanding shares.
Cash generated from portfolio exits totalled £68.1 million, significantly lower than the £183.4 million recorded in 2024. Meanwhile, companies within the portfolio collectively raised £914 million in funding over the course of the year.
The group’s exposure to the Pfizer-related deal remains conditional. The £128.2 million valuation depends on royalty income linked to drug candidates including PF’3944, which has not yet completed Phase 3 clinical trials. IP Group’s sensitivity analysis indicates that the valuation could shift significantly depending on trial outcomes and discount rate assumptions.
Chief Executive Greg Smith said the company remained confident it could achieve more than £250 million in portfolio exits between 2025 and the end of 2027.
IP Group also revealed that it is partnering with Aberdeen to manage a portfolio of UK venture investments and said it has set aside an additional £30 million earmarked for future shareholder returns.
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