IP Group's 'patient money' a $200m research booster
The Australian, 31 May 2017
By Julie Hare
In a landmark deal, at least $200 million will be invested in research in local universities over the next decade, potentially creating dozens of start-ups, opening new markets and attracting investor funds that have previously avoided the university sector.
The deal between the London-based IP Group, the Group of Eight and the University of Auckland was an acknowledgment of the depth and quality of Australian research, according to Group of Eight chairman Peter Hoj.
“The IP Group could see the quality of our research but also that this was largely untilled ground in Australia,” Professor Hoj said.
Peter Grant, IP Group’s managing director of new business and partnerships, said the nine universities involved ticked all the boxes necessary to pique his company’s interest and attract investment.
“In order for us to be interested, the universities need to produce top quality research; there needs to be a long-term partnership; and there needs to be potential to raise extra capital, preferably from the region,” said Dr Grant, who has a has a PhD in biochemistry from Cardiff University.
TelstraSuper has already jumped on board with the purchase of a 35 per cent stake in IP Group, which Professor Hoj described as a hugely positive sign.
“Many universities feel that super funds have been too conservative in the innovation space,” he said.
Dr Grant said IP Group was essentially different to traditional venture capital funds by virtue of its taking a significant but minority shareholding in the companies they created.
“We take a stake in the range of 20 to 40 per cent and we will hold our corner as the company grows,’’ Dr Grant said.
“If it does well, there is no reason to get out.
“As the companies grow in assets, that is reflected in our share price.”
IP Group has about 100 companies across its four sectors: healthcare, including genomics and medical devices; biotechnology, such as therapeutics and drug discovery; clean technologies, especially in the energy space; and engineering and software.
“It’s not an easy game to play. I’ve been doing it since 2002 and we have made loads of mistakes, especially in the early days,” Dr Grant said.
University of NSW vice-chancellor Ian Jacobs, who is also Go8 deputy chairman, said one of the most important elements of the IP Group’s approach to commercialisation was that it was “patient money”.
“They are comfortable in investing for 10 years or even longer before looking for a return on their investment,” Professor Jacobs said. “There aren’t many examples of that in Australia.
“They have looked really hard and seen the research we put out and concluded that there is an opportunity that they can take advantage of.”
Professor Jacobs said the company’s long-term approach paid dividends: it boasted a 19 per cent annual return on investments.
“That fits with what we have been saying; that Australia hasn’t been taking advantage of the scale, quality and strength of its basic science and we have not been translating that research,” Professor Jacobs said.
“Hopefully other funds will see what IP Group has done and follow suit.”