Imperial tech-transfer unit sets date for stock market debut

Imperial College London is set to become the first university to float its technology-transfer office directly on the stock market, as the unit formally set a date of July 31 for its debut on London’s Alternative Investment Market.
 
The tech-transfer unit, Imperial Innovations Group plc, is planning an initial public offering and a listing on London’s Alternative Investment Market. The company, at present 71.19 per cent-owned by the university, said it will offer up to 49,663,878 ordinary shares of 3 1/33 pence each for sale and will raise up to £26.5 million, according to a routine regulatory filing notice made prior to admission on AIM, the small-company market of the London Stock Exchange. The filing didn’t say what percentage of the company will be floated, and officials declined to comment immediately.
 
Separately, the university said it also raised £50 million in a bond sale to help fund its academic mission, as well as providing capital for new student facilities and other estate projects.
 
Radical departure

Imperial Innovation’s IPO has been a few years in the making – and is a radical departure from the way most universities around the world handle the business of selling their discoveries to industry and investors. The aims include tapping a new source of capital, boosting return on its portfolio of discoveries, and giving the whole process of tech-transfer at the university a major boost. But it's also a controversial move in the academic world. Critics say it pushes the commercialisation of science one step too far, compromising academic freedom. It commits the fruits of much future research at Imperial, up to 2020, to the new company and its investors.
 
Analysts greeted the news with interest – but noted it will have competition for investor attention.
 
“Imperial Innovations is (at) one of the best research universities in the country,” commented Alex Jarvis, an analyst at securities firm KBC Peel Hunt. For investors, the potential appeal of an Imperial Innovations investment is getting a piece of a world-class university’s technology portfolio – but there are also other, competing tech-transfer companies on the public market, following different strategies. Among the largest is IP Group PLC, which licenses technology from several British universities rather than just one. IP Group, Jarvis said, “is working very well but it has a broader reach with a number of universities; so it’s difficult to know what kind of value investors will attribute to a single university (Imperial Innovations).”
 
Pioneering models

Imperial Innovations is one of a new class of tech-transfer models being pioneered in Britain’s high-quality, but cash-starved academic world.  Others include Biofusion plc, a publicly listed company that commercializes life-science discoveries at the University of Sheffield, Amphion Innovations, Medical Marketing International Group and IP Group, formerly known as IP2IPO. IP Group sells technology from seven long-term partners: King's College London, the chemistry department of Oxford University, and the universities of York, Leeds, Bristol, Surrey and Southampton. As of 13 June 2006, 42 spin-out companies had been created among the group's university partners.
 
Preparations for the Imperial Innovations flotation intensified in June 2005, when the university placed shares privately in the tech-transfer unit with seven institutional investors. The transaction netted the university £10 million for research and other expenses, and the transfer office a further £10 million to re-invest in new spin-offs. Besides the university with a 71.19 per cent stake, other major investors include Norstan Nominees Ltd. with 10 per cent, Barclays Capital Nominees (No 3) Ltd. with 5 per cent, FF&P IC 2002 LLP(1) with 3.25 per cent, and Gordon House Investor LLP(1) with 1.36 per cent, according to the regulatory filing.
 
Imperial Innovations has generated revenues in excess of £30 million from spin-outs and licenses since 1997.  The company has established equity holdings in more than 60 spin-out companies and completed over 100 commercial agreements. Imperial Innovations currently holds shares in three spin-out companies now quoted on AIM; fuel cell company Ceres Power plc; ParOS plc, a provider of energy-saving advanced control solutions; and Nanoscience plc, a developer of low power integrated circuits and silicon chips, following its acquisition of spin-out company Toumaz Technology.
 
JPMorgan Cazenove is the advisor and the broker of the share sale
 
Separately, Imperial College London said it completed the sale of £50 million in 50-year term bonds, according to a press statement.  The university's total borrowing facilities now amount to £173 million, after financings arranged in 2003 and 2005. The college has so far drawn down £123 million of this total funding, the statement said.  The Royal Bank of Scotland acted as sole agent for the private placement, it added.
 
The university, which has more than 11,000 full-time students from 2004 to 2005, is ranked third in Europe and 23rd in the world, according to the 2005 ranking of world universities by Shanghai’s Jaio Tong University.