VSA Capital Market Movers – Frontier IP Group plc

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Frontier IP Group PLC#: Initiation of Coverage

Creating Value for Growth Technology Companies

Frontier IP Group (“Frontier IP”) provides commercialisation services in return for equity in private technology companies. The Group’s equity holdings are in four high growth technology clusters comprising: artificial intelligence, robotics and big and sparse data; pathogens and cell imaging; food and agritech; and engineered particles and materials. Frontier IP’s early access to companies with leading-edge IP and the structural growth in the target clusters offers potential for strong upside. The year ending June 2020, saw Frontier IP’s portfolio value increase by 47 percent to £19.4m.   

Access to Leading Edge University IP

The Group has worked with Universities including Cambridge, Heriot-Watt Manchester, Plymouth, NOVA University Lisbon and the Portuguese Institute for Systems and Computer Engineering (INESC TEC). Frontier IP’s relationships help to secure early access to leading edge IP, such as AI in drug discovery that has led to a 2.4 percent equity holding in Oxford based Exscientia. In May 2020, Exscientia raised £46m in a Series C round. Exscientia’s AI is now deployed to help discover drugs for pharmaceutical majors including Bayer, Bristol-Myers Squibb, GlaxoSmithKline, Roche and Sanofi.   

Strong Relationships with Industry Partners

Frontier IP works closely with Universities, Research Institutes and Academics to identify IP that can be commercialised. The Group then plays a main role in not only providing expertise and access to external funding but also commercialisation by taking a hands-on approach to commercial and technical development and by bringing in industry partners. This is key to increasing equity value. Industry partners include Bosch, whom Frontier introduced to portfolio companies Fieldwork Robotics and PulsiV Solar.

Recommendation

Of the 19 portfolio companies, a number are at a point of acceleration in commercial development, paving the way for a step up in valuation or a potential exit. Frontier IP has a proven record in commercialising University IP and increasing its EPS and NAV as portfolio company valuations rise. That success is seeing the Group invest in its own expansion for growth. We believe that Frontier IP represents an excellent opportunity for investors to gain exposure to early-stage technology companies, based on leading edge IP, which meets the needs and demands of international markets.

We initiate coverage with a Buy Recommendation.

Phil Smith, Equity Analyst, Technology | T: +44 (0)20 3617 5187 | E: [email protected]

VSA Capital Limited, New Liverpool House, 15-17 Eldon Street, London EC2M 7LD | www.vsacapital.com

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