Fusion IP to raise £20m through placing

Sheffield-based Fusion IP, which already has long-term exclusive agreements with the University of Sheffield and Cardiff University, also said that it has signed agreements with two additional universities – the University of Nottingham and Swansea University – which are conditional on the share placing.

The deals will increase Fusion IP’s access to “additional world class IP (intellectual property)”, it said, while the additional funds “will ensure it has the financial strength to invest further in key portfolio companies and to establish new companies out of its expanded pipeline”.

Fusion IP said that £20m would be raised through an issue of 36,363,637 ordinary shares of 1p in the company at a price of 55p per share to existing and new institutional shareholders. It said the placing is conditional upon shareholder approval at a general meeting on April 10.

David Baynes, chief executive of Fusion IP, said: “We are very pleased to announce this significant additional investment in the company, in a funding round which includes all our current institutional shareholders, as well as adding a number of new institutions. Combined with our new university agreements, this is clearly a significant advance for Fusion IP.

“Nottingham is one of the UK’s top 10 research-intensive universities, with centres of excellence in aerospace, advanced manufacturing, energy and biomedical imaging. We are also delighted to be expanding our operation in Wales, with the addition of Swansea University into the portfolio.

“We remain fully committed to the commercialisation of IP that is generated out of the UK’s leading universities and believe we are now well placed to further increase our pipeline of companies and to maximise the potential returns from our increasingly mature portfolio.”

Fusion IP said that the memorandum of understanding (MOU) agreements with the University of Nottingham and Swansea University complement its existing equity-based university agreements by providing the company with access to IP, but without having to make ongoing or equity-based payments.

Fusion IP said: “The directors believe this structure provides a flexible partnership for both parties, and enables the university to access Fusion IP’s management and funds, while Fusion IP gains access to such university’s IP without tying up equity or contractual service fees.”

Fusion IP said the share placing will provide it with funding to continue to invest in existing portfolio companies; invest in new start-up companies created under the existing agreements with the universities; invest in new portfolio companies that will be created from the new MOU agreements with its new university partners; and in due course, negotiate and execute MOU agreements with additional universities. The directors also intend to utilise some of the net proceeds for general working capital purposes.

In the update to the stock exchange yesterday, Fusion IP said that it had cash of around £4m at the end of January 2013 and “does not expect any material changes to the value of its portfolio” in the first six months of the year.

It said the directors believe that a number of companies are increasing in value, which will be reflected in results in the longer term.

Fusion IP was established in 2002 and currently owns shareholdings in more than 20 portfolio companies, including significant shareholdings in Seren, Magnomatics, Phase Focus, MedaPhor, Asalus and Diurnal.

In 2012 Fusion IP announced its first major exit, when it sold its portfolio company Simcyp to US based Certara LP for $32m, a 200-fold return on its original investment.

In the year ended July 31, 2012, the value of Fusion IP’s portfolio increased to £19.8m, from £16.8m in the previous year.

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