IP Group saw its net asset value (NAV) per share rise to 110.4 pence at Dec. 31, 2025, up from 97.7 pence a year earlier, the company said, reflecting a 13% uplift driven in large part by licensing income recognised after Pfizer Inc's purchase of Metsera.
The London-listed science investor recorded £128.2 million in licensing income following Pfizer's acquisition of Metsera, the maker of a weight-loss drug. That one-off accounting gain contributed to a rally in IP Group shares, which advanced more than 8% on Tuesday.
However, the windfall coincided with an accounting change that had unintended consequences for the group's financial reporting and covenant testing. In December the firm reclassified itself as an "investment entity" under IFRS 10. That structural change affects how subsidiaries are consolidated on the group's balance sheet.
As a result of the reclassification, the company ran into a technical breach of covenants tied to a £120 million private placement. Noteholders' definition of qualifying cash limited eligible funds to those held at the parent company alone, whereas IP Group had previously included cash held across the wider group when assessing compliance.
At year-end IP Group held £87.8 million in cash equivalents and £123.2 million in deposits in total, but not enough of that cash sat directly at the parent company to meet the noteholders' measure. The company obtained a waiver from noteholders and subsequently moved cash into the parent entity. The episode nevertheless forced £119.7 million of borrowings to be reclassified from long-term to current liabilities on the balance sheet.
The group reported a profit of £66.9 million for 2025, reversing a loss of £207 million in 2024. Gross cash stood at £211 million. Despite these results, the market continues to value the stock at a significant discount to stated NAV: the shares closed 2025 at 58.6 pence versus a NAV of 110.4 pence, a gap of nearly 47%.
Management addressed the discount directly during the year, completing a £75 million buyback programme that retired 9% of shares outstanding. Total cash proceeds from exits were £68.1 million in 2025, down from £183.4 million the prior year. Across the portfolio, companies raised a combined £914 million in capital during the year.
IP Group highlighted that its exposure to the Pfizer transaction is conditional. The £128.2 million valuation reflects royalty streams tied to drug candidates including PF'3944, which has not yet completed Phase 3 trials. In its sensitivity disclosures the company shows that the valuation moves materially with changes in clinical trial success probabilities and discount rate assumptions.
Looking ahead, Chief Executive Greg Smith said the group is confident it can deliver more than £250 million in exits between 2025 and the end of 2027. The company also disclosed it is working with Aberdeen to manage a portfolio of UK venture investments and that a further £30 million has been accumulated for potential future shareholder returns.
Contextual note: The NAV uplift and related cash movements illustrate how a single large licensing event can reshape a venture investor's balance sheet and covenant profile, even while producing a one-off increase in reported profitability and NAV.