THE DEFINED TERMS SET OUT IN THE APPENDIX APPLY IN THIS ANNOUNCEMENT.

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1 THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR THE UNITED STATES OR INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OR BREACH OF ANY APPLICABLE LAW. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT. THIS ANNOUNCEMENT, WHICH DOES NOT CONSTITUTE A PROSPECTUS OR DOCUMENT EQUIVALENT TO A PROSPECTUS, IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES AND NEITHER THIS ANNOUNCEMENT NOR ANYTHING HEREIN FORMS THE BASIS FOR ANY CONTRACT OR COMMITMENT WHATSOEVER. SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION AND THE SECURITIES DESCRIBED HEREIN WILL BE SOLD IN ACCORDANCE WITH ALL APPLICABLE LAWS AND REGULATIONS. THE DEFINED TERMS SET OUT IN THE APPENDIX APPLY IN THIS ANNOUNCEMENT. THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT CONSTITUTES INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/ May 2017 IP Group plc ( IP Group, the Group or the Company ) Proposed Firm Placing and Placing, Open Offer and Offer for Subscription and Notice of General Meeting and Launch of IP Group Australia The Board of IP Group announces that it intends to raise gross proceeds of up to approximately million (approximately million net of Capital Raising costs and expenses) in a Capital Raising by way of a Firm Placing and a Placing, Open Offer and Offer for Subscription, consisting of the issue of up to 142,857,136 Capital Raising Shares in aggregate at an issue price of 140 pence per Capital Raising Share. The Board has the ability to increase the size of the Issue by up to 66.6 million by the issue of up to a further 47,571,428 Capital Raising Shares, so that gross proceeds would be approximately million (approximately million net of all Capital Raising costs and expenses) should there be sufficient demand. The Company also announces that it is launching IP Group Australia, a wholly-owned private company incorporated in the State of Victoria, Australia, focused on the creation and support of world changing companies in Australia and New Zealand. The Company and IP Group Australia have entered into commercialisation agreements with nine leading Australian and New Zealand research universities (the Go9 Universities ) under which it intends to form spin-out companies based on disruptive IP developed in such universities. The Company also notes, as separately announced earlier today, that it recently made an approach to the Touchstone Board regarding a possible all-share combination of the Company and Touchstone Innovations. The Capital Raising is conditional, inter alia, upon Shareholders passing the Resolutions at the General Meeting. The Capital Raising and the Possible Offer are not interconditional and neither is contingent on the other. 1

2 IP Group will shortly be publishing a Prospectus in connection with the Capital Raising and will be convening the General Meeting to approve certain matters necessary to implement the proposed Capital Raising. Summary Issue of 96,428,566 Capital Raising Shares through a Firm Placing raising gross proceeds of million. The Firm Placing is underwritten by Numis Issue of up to 46,428,570 Capital Raising Shares pursuant to a non-underwritten Placing, Open Offer and Offer for Subscription to raise gross proceeds of up to approximately 65.0 million Participation in the Capital Raising by new shareholders including Temasek and Telstra Super Pty Ltd and existing shareholders including Invesco, Woodford and Lansdowne Qualifying Shareholders are being offered the opportunity to participate in the Open Offer, on the basis of 1 Open Offer Share for every 13 Record Date Shares Qualifying Shareholders are also being offered the opportunity to subscribe for Capital Raising Shares in addition to their Open Offer Entitlements under the Excess Application Facility The Board has the ability to increase the size of the Capital Raising by up to approximately one third should there be sufficient demand so that the total gross proceeds would be approximately million The Capital Raising will strengthen the financial position of the Group, enabling IP Group to deploy further capital into new and existing commercialisation opportunities both in the UK and the US and will provide the necessary capital to successfully launch and develop IP Group Australia The Capital Raising is conditional, inter alia, upon the passing of the Resolutions at the General Meeting. If the Resolutions are passed and the other conditions to the Capital Raising are satisfied, it is expected that dealings in the Capital Raising Shares will commence at 8.00 a.m. on 9 June 2017 The Company separately announced today that it recently made an approach to the Touchstone Board regarding a possible all-share combination of the Company and Touchstone The Capital Raising is not conditional on the Possible Offer and the Possible Offer is not conditional upon the Capital Raising The Directors consider that a combination of the Group and Touchstone would create an international leader in IP commercialisation and an enlarged business with substantial capabilities that would be greater than the sum of the two parts. The combination would allow both the Company s and Touchstone s shareholders to participate in any future value generated by the enlarged Group and its more diversified portfolio. The Prospectus concerning the Capital Raising will shortly be sent to Shareholders and will also be made available on the Company s website Further details are set out in this announcement and in the Prospectus. A copy of the Prospectus will be submitted to the National Storage Mechanism and will shortly be available for inspection at: 2

3 Alan Aubrey, Chief Executive Officer of IP Group, said: The transactions announced today represent a transformational step forward in IP Group s development. The increased global scale achieved through the Capital Raising, the establishment of IP Group Australia anchored by nine new university agreements, and the possible combination with Touchstone will enable us to build on our strong track record of value creation, partnering with worldleading research universities. Increasing our capital base will enable us to accelerate the growth of the Group by investing in new and existing portfolio companies, building on our pool of scientific and commercial talent, and attracting further investors and co-investment partners. We are delighted to welcome new investors, including Temasek and Telstra Super Pty Ltd, to our register and would like to thank our existing shareholders for their ongoing commitment and support. Readers are referred to the important notice that applies to this announcement. Unless otherwise stated, references to time contained in this announcement are to UK time. This announcement has been issued by and is the sole responsibility of IP Group plc. Investor and Analyst Conference Call Details IP Group will host a conference call for investors and analysts today at 9:30am BST. A presentation will be available for download from prior to the conference call. For regulatory reasons, this conference call may not be accessed by any person in, and any associated materials may not be released, published, or distributed directly or indirectly, in or into or from the United States, Canada, Australia, Japan, New Zealand or the Republic of South Africa or in any jurisdiction where to do so would breach any applicable law. UK Dial-in: Confirmation Code: # For further information contact: IP Group plc Alan Aubrey, Chief Executive Officer +44 (0) Greg Smith, Chief Financial Officer +44 (0) Liz Vaughan-Adams, Communications +44 (0) /+44 (0) Numis Securities Limited (Sponsor, Broker and Joint Financial Adviser) Michael Meade James Black Freddie Barnfield +44(0) Rothschild (Joint Financial Adviser) +44 (0) Warner Mandel Anton Black Peter Nicklin Noel Monro Charlotte Street Partners Andrew Wilson +44 (0) Martha Walsh +44 (0)

4 IMPORTANT NOTICE This announcement is an advertisement and does not constitute a prospectus or prospectus equivalent document. Nothing in this announcement should be interpreted as a term or condition of the Open Offer or the Offer for Subscription. Investors should not subscribe for or purchase any shares in the Open Offer or the Offer for Subscription except on the basis of the information contained in the Prospectus to be published shortly or which is incorporated by reference into the Prospectus. The Prospectus, when published, will be made available on the Company s website ( and will be available for inspection at: This announcement does not constitute or form part of any offer or invitation to purchase, or otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security in the capital of the Company in any jurisdiction. The information contained in this announcement is not for release, publication or distribution to persons in the United States, Canada, Australia, Japan, New Zealand or the Republic of South Africa or in any jurisdiction where to do so would breach any applicable law. The Capital Raising Shares have not been and will not be registered under the securities laws of such jurisdictions and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within such jurisdictions except pursuant to an exemption from and in compliance with any applicable securities laws. No public offer of the Capital Raising Shares is being made by virtue of this announcement into Australia, Canada, Japan, New Zealand, the Republic of South Africa or the United States or any other jurisdiction outside the United Kingdom in which such offer would be lawful. No action has been or will be taken by the Company, Numis or any other person to permit a public offering or distribution of this announcement or any other offering or publicity materials or the Capital Raising Shares in any jurisdiction where action for that purpose may be required, other than in the United Kingdom. This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933 as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States. This announcement has been issued by and is the sole responsibility of the Company. Numis Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for IP Group plc and for no-one else in connection with the contents of this announcement and will not be responsible to anyone other than IP Group plc for providing the protections afforded to clients of Numis Securities Limited, or for providing advice in relation to the contents of this announcement or any matters referred to herein. Numis Securities Limited is not responsible for the contents of this announcement. Numis Securities Limited has given and not withdrawn its written consent to the issue of this announcement with the inclusion of the reference to its name in the form and context in which it is included. N M Rothschild & Sons Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting for IP Group Plc and no-one else in connection with the contents of this announcement and will not be responsible to anyone other than IP Group Plc for providing the protections afforded to clients of N M Rothschild & Sons Limited nor for providing advice in connection with the contents of this announcement. This announcement has been prepared for the purposes of complying with the applicable law and regulation of the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom. 4

5 Note regarding forward-looking statements: This announcement includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms anticipates, believes, estimates, expects, intends, may, plans, projects, should or will, or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include, but are not limited to, statements regarding the Company s and/or Directors intentions, beliefs or current expectations concerning, amongst other things, the Group s results of operations, financial position, prospects, growth, strategies and expectations for the Company s or its portfolio companies principal markets. Any forward-looking statements in this announcement reflect the Company s current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Group s operations, results of operations and growth strategy. Investors should specifically consider the factors identified in this announcement which could cause actual results to differ before making an investment decision. Subject to the requirements of the Prospectus Rules, the Disclosure Guidance and Transparency Rules, the Listing Rules and the EU Market Abuse Regulation (Regulation 596/2014), none of the Company, the Directors and Numis undertake any obligation publicly to release the result of any revisions to any forward-looking statements in this announcement that may occur due to any change in the Company s expectations or to reflect events or circumstances after the date of this announcement. Past performance of the Company is not necessarily indicative of future performance. You are advised to read this announcement and, once available the Prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Company s or the Group s future performance and the industries in which they operate. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur. Neither the content of the Company s website (or any other website) nor any website accessible by hyperlinks on the Company s website (or any other website) is incorporated in, or forms part of, this announcement. Any person receiving this announcement is advised to exercise caution in relation to the Capital Raising. If in any doubt about any of the contents of this announcement, independent professional advice should be obtained. This summary should be read in conjunction with the full text of the announcement which follows. Expected timetable Event Time/Date Record Date for entitlement under the Open Offer 5.30 p.m. on 19 May 2017 Announcement of the Capital Raising 23 May 2017 Ex-entitlement date for the Open Offer 23 May 2017 Publication and posting of the Prospectus, Form of Proxy and Application Form 23 May

6 Open Offer Entitlements credited to stock account of Qualifying CREST Shareholders in CREST Recommended latest time and date for requesting withdrawal of Open Offer Entitlements from CREST Latest time and date for depositing Open Offer Entitlements into CREST Latest time and date for splitting Application Forms (to satisfy bona fide market claims only) Latest time and date for receipt of Forms of Proxy and receipt of electronic proxy appointments via the CREST system Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer and settlement of relevant CREST instructions Latest time and date for receipt of completed Subscription Forms and payment in full under the Offer for Subscription or settlement of relevant CREST instructions as soon as possible after 8.00 a.m. on 24 May p.m. on 1 June p.m. on 2 June p.m. on 5 June a.m. on 6 June a.m. on 7 June p.m. on 7 June 2017 Latest time and date for receipt of Placing commitments a.m. on 7 June 2017 General Meeting a.m. on 8 June 2017 Expected date of announcement of results of the General Meeting and the Capital Raising through a Regulatory Information Service Expected date of Admission and commencement of dealings in Capital Raising Shares Capital Raising Shares in uncertificated form expected to be credited to accounts as soon as practicable in CREST Expected date of despatch of definitive share certificates for Capital Raising Shares in certificated form 8 June a.m. on 9 June June 2017 week commencing 12 June 2017 The times and dates set out in the expected timetable of principal events above and mentioned throughout this announcement are times in London unless otherwise stated, and may be adjusted by the Company in consultation with or, if required, with the agreement of Numis, in which event details of the new times and dates will be notified to the FCA, the London Stock Exchange and, where appropriate, Shareholders. 6

7 Introduction The Board announces today that it intends to raise gross proceeds of up to approximately million (approximately million net of Capital Raising costs and expenses) in the Capital Raising by way of a Firm Placing and a Placing, Open Offer and Offer for Subscription, consisting of the issue of up to 142,857,136 Capital Raising Shares in aggregate at an issue price of 140 pence per Capital Raising Share. 96,428,566 Capital Raising Shares will be issued through the Firm Placing and up to 46,428,570 Capital Raising Shares will be issued through the Placing, Open Offer and Offer for Subscription. The Board has the ability to increase the size of the Issue by up to 66.6 million by the issue of up to a further 47,571,428 Capital Raising Shares so that gross proceeds would be approximately million (approximately million net of all Capital Raising costs and expenses) should there be sufficient demand. The Firm Placing is fully underwritten by Numis. It is the Board s opinion that the Capital Raising will strengthen the financial position of the Group. Specifically, it will provide the necessary capital to successfully launch and develop IP Group Australia and enable it to deploy further capital into new and existing commercialisation opportunities both in the UK and the US. The Board therefore considers the launch of IP Group Australia and the Capital Raising to be in the best interests of the Company and Shareholders as a whole and unanimously recommends that Shareholders vote in favour of the Resolutions. The Company also announces that it is launching IP Group Australia, a wholly-owned private company incorporated in the State of Victoria, Australia, focused on the creation and support of world changing companies in Australia and New Zealand. IP Group Australia has entered into commercialisation agreements with the Go9 Universities under which it intends to form spin-out companies based on disruptive IP developed in such universities. As a result, through its existing Partnerships and these new agreements with the Go9 Universities, the Group will have unrivalled access to commercialisable IP from universities whose academic staff have published 14.9% per cent of the world s Top Research 1. Possible Offer for Touchstone Innovations plc The Company also announced earlier today that it recently made an approach to the Board of Touchstone regarding a possible combination with Touchstone (the Combination ). The Board of Touchstone rejected the proposed Combination. The IP Group Directors consider that the Combination would create an international leader in IP commercialisation and an enlarged business with substantial capabilities that would be greater than the sum of the two parts. The Combination would allow both IP Group and Touchstone shareholders to participate in any future value generated by the enlarged Group and its more diversified portfolio. The possible all-share offer for Touchstone is being considered on the basis of the terms set out below (the Possible Offer ). IP Group has received support for the Possible Offer from Touchstone shareholders representing, in aggregate, 51.8 per cent of Touchstone s issued share capital (further details of the irrevocable undertaking and letters of intent are set out in the 2.4 announcement). The IP Group Directors look forward to further engagement with Touchstone regarding this proposal. The Possible Offer The terms of the Possible Offer would comprise the issue of IP Group shares for each Touchstone share, subject to adjustment as set out below (the Exchange Ratio ) which, prior to the Capital Raise: would result in Touchstone shareholders owning approximately 38 per cent. of the enlarged share capital of IP Group; and implies an offer value of 307 pence per Touchstone share, based on IP Group s closing share price of 143 pence on 22 May Top Research classified as the top 10% of publications cited globally. Based on the top 200 universities volume of Top Research during Based on data from the Leiden University Rankings

8 The Exchange Ratio will be adjusted: 1. following admission and settlement of the new IP Group shares issued pursuant to the Capital Raise, to take into account the scale of the Capital Raise and the 2.1 per cent. discount offered on IP Group shares offered as part of the Capital Raise. For example, if the amount raised by the Capital Raise is 200 million at 140 pence per IP Group share: a. the Exchange Ratio would increase to ; b. Touchstone shareholders would own approximately 33 per cent. of the enlarged share capital of IP Group; and c. on the basis of the closing IP Group share price on 22 May 2017, the implied offer value would remain 307 pence per Touchstone share 2. if, as a result of an increase in the IP Group share price, the implied offer value per Touchstone share were to become worth more than 320 pence (the Offer Cap ). In such event, the number of IP Group shares to be issued per Touchstone share will be reduced such that the implied offer value per Touchstone share remains at 320 pence. The IP Group share price used for this adjustment will be calculated by reference to the volume weighted average price of an IP Group share over a set period. The mechanics for the amendment of the Exchange Ratio under adjustment (2) above (including the date when it will be made) will be described fully in any announcement of a firm offer for Touchstone made under Rule 2.7 of the Code, if and when made. The Offer Cap is not a no increase statement and should not be taken to mean that the Exchange Ratio or Offer Cap cannot be increased in any announcement of a firm intention to make an offer pursuant to Rule 2.7 of the Code. Background to and reasons for the Possible Offer The IP Group Directors consider that the combination of Touchstone and IP Group would create an international leader in IP commercialisation and a combined business with substantial capabilities that is greater than the sum of the two parts. Specifically, the IP Group Directors believe that a combination with Touchstone would provide the combined group with the following key benefits: 1. An enlarged platform for growth and investment; 2. A larger portfolio with diversification across sectors and maturity of assets; 3. An experienced team with complementary industry backgrounds; and 4. Access to IP developed at Imperial College London and University College London adding to IP Group s existing Partnerships with other leading UK research universities. General and reservations to the Possible Offer Under Rule 2.6(a) of the Code, IP Group must, by 5:00 p.m. on 20 June 2017, either announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Code. IP Group reserves the right to make an offer on less favourable terms than those set out in this announcement in the event that: 1. an agreement or recommendation in respect of such terms is reached with the Board of Touchstone, or 2. an offer or possible offer for Touchstone is announced by a third party. 8

9 In the event Touchstone announces, declares, pays or makes any dividend or distribution to Touchstone shareholders at any time, IP Group reserves the right to make an equivalent reduction in the terms of the Possible Offer. In addition, IP Group reserves the right to introduce other forms of consideration and/or vary the proposed mix of consideration in any offer. Background to and reasons for the Capital Raising Overview of the Company The Group's business of commercialising scientific and technical innovation developed in leading research institutions was established in The Group s business model is to form, or assist in the formation of, start-up companies based on disruptive scientific and technical innovation developed from within those institutions, to take a significant minority equity stake in these companies and then to grow the value of that equity over time through taking an active role in the development of these companies. The Group s strategy has been to build significant minority equity stakes across a diversified portfolio of companies falling within its four main sectors of Biotech, Cleantech, Healthcare and Technology designed to achieve strong equity returns over the medium to long term. An important aspect of the Group s strategy is its ability to access a wide range of leading scientific research through its arrangements (both exclusive and non-exclusive) with leading research intensive institutions. In the UK the access has been achieved primarily through long-term partnerships with a number of leading research universities. The Group entered into its first long term partnership in Since this time, the Group has entered into further partnerships and now has direct arrangements covering thirteen of the UK s leading universities. In addition to these direct contractual arrangements, the Group also has two strategic holdings in Oxford Sciences Innovation plc and Cambridge Innovation Capital plc. Oxford Sciences Innovation plc is the contractually preferred partner of the University of Oxford and provides capital to and develops spin-out companies based on research from the University s Mathematical, Physical and Life Sciences Division and its Medical Sciences Division. Cambridge Innovation Capital plc supports the growth of innovative businesses located in the Cambridge Cluster and is supported by the University of Cambridge s commercialisation office, Cambridge Enterprise. The Group and Cambridge Innovation Capital have also entered into a memorandum of understanding to share information on investment and co-investment opportunities. The Group also is in discussion with other universities in the UK. The Group leverages the capabilities of its in-house sourcing team to identify and pursue compelling commercialisation opportunities arising from universities. This New Business and Partnerships team works with the Group s partners to identify promising research and novel disruptive IP on which to create and build new businesses. The Group, through the work of that team, utilises its proprietary hypothesisbased methodologies to assess new opportunities and decide which to progress. These techniques are also used to monitor progress and shape the evolving strategy of the opportunities throughout their life cycle. The Group has access to intellectual property emanating from research carried out in the United States through its IP commercialisation agreements with five Ivy League universities. During 2013 and 2014 the Group entered into several pilot phase projects under collaboration agreements with Columbia University, University of Pennsylvania, the University of Pennsylvania s Center for Technology Transfer s UPstart company formation programme and Princeton University. Each collaboration agreement had an initial pilot phase of eighteen months and focused on the identification and potential commercialisation of early stage, proof of principle opportunities based on intellectual property developed at each university. Each pilot phase was subsequently extended during the course of 2015 and 2016 and the agreements varied to enable the parties to reflect the advancement of their working relationships. The extended agreements are not time limited and continue on a rolling renewal basis subject to their terms. 9

10 In addition, in November 2014, the Group launched a commercialisation initiative with FedIMPACT to identify and develop early stage technologies from a distinct group of US Department of Energy National Laboratories. The Group s current relationships through FedIMPACT are with Pacific Northwest National Laboratory, Argonne National Laboratory and The National Renewable Energy Laboratory. The Group recently entered into pilot agreements with a further two leading US research universities and is currently assessing the first potential spin-out opportunities therefrom. Subject to completion of the Capital Raising, the Group now has access to intellectual property emanating from research carried out in Australia and New Zealand through its agreements with the Go9 Universities. The Go9 Universities are Monash University, the Australian National University, the University of Adelaide, the University of Melbourne, the University of Queensland, the University of Sydney, the University of Western Australia, UNSW Australia and the University of Auckland. The Australian universities (together called the Go8) comprise Australia's premier group of universities and has educated every Nobel prize winner who attended at an Australian university. Each year the Go8 spends some AU$6 billion on research. Ninety nine per cent. of Go8 research is ranked as world class and the QS World University rankings has six Go8 universities in its top 100. The University of Auckland is the largest university in New Zealand and is New Zealand's leading worldranked university and is in the top 100 in the QS World University rankings. In addition to its new partnerships in Australia and New Zealand, the Group has been engaging with potential research and funding partners in Singapore and is currently evaluating whether a presence could strengthen the establishment of the Group s position in the wider Asia-Pacific region. The Directors consider that Singapore represents a potential opportunity for the Group to be a global partner to a fastgrowing technology ecosystem with leading research institutions and an established network of institutional co-investors. In addition, the Group has had initial exploratory conversations with potential financing partners in China. As at 31 December, the Group had a portfolio of 90 companies, three multi-sector platforms (OSI, CIC and Frontier IP Group plc ) and 20 de minimis holdings in which its combined stake was valued at approximately million 2. Of the 90 companies (excluding the Group's holdings in OSI, CIC, Frontier IP Group plc and the 20 de minimis holdings) in the Group's portfolio, 76 per cent. of the fair value resides in the ten most valuable companies, many of which have made significant progress in the last twelve months towards achieving key milestones and commercial validation. In 2016, the Group invested a total of 30.1 million in its top ten companies (by value) representing approximately 51.2 per cent. of the 58.8 million aggregate annual investment into the portfolio, which excludes 10.9m invested into the Group s strategic holdings in OSI and CIC. As at 31 December 2016, the aggregate value of the portfolio companies in which the Group had an investment (excluding multi-sector platforms and de minimis holdings), calculated by reference to the Group's holding in such companies and grossed up to reflect their total value exceeded 2.7 billion 3 or approximately 3.3billion including the Group's three holdings in multi-sector platform companies (OSI, CIC and Frontier IP Group plc). As at 31 December 2016, the Group s portfolio of 90 businesses (excluding three multi-sector platforms and 20 de minimis holdings) consisted of 39 Early-stage businesses, 32 Development stage businesses and 19 Focus stage businesses of which 8 were quoted. Reasons for the Capital Raising The Group has built a platform for the systematic commercialisation of intellectual property which has primarily been sourced from within UK, and more recently US, universities or other research intensive institutions with which the Group has Partnerships or other collaborative arrangements. 2 Calculated by reference to the values attributed to the Group s investments in such portfolio companies in the Group s audited results for the year ended 31 December Calculated by reference to the values attributed to the Group s investments in such portfolio companies in the audited results of the Group for the year ended 31 December 2016 grossed up to reflect the overall value of such portfolio companies. 10

11 The Board believes that the formation of IP Group Australia provides the Group with the opportunity to obtain access to a significant source of world-leading academic research via the Go9 Agreements. Through these agreements the Group will seek to create and maintain a pipeline of compelling intellectual property based opportunities and develop and support these opportunities into a diversified portfolio of robust businesses. In so forming spin-out companies based on the intellectual property developed in such universities, the Group seeks to evolve great ideas into world-changing businesses. The Board believes that the Go9 Universities represent a significant source of potentially world-class and disruptive IP. Three of the Go9 Universities, being the University of Melbourne, the University of Queensland and the University of Sydney, are ranked within the world s top 50 research universities, and five of the other members of the Go9 are within the world s top 200 research universities. Academic staff at the Go9 Universities have published a total of 4 per cent. of the world s Top Research 4. The Go9 Agreements that the Company and IP Group Australia have entered into with the Go9 Universities mean that the Group will have access to commercialisable intellectual property from universities whose academic staff have published 14.9 per cent. of the world s Top Research. The Group considers that IP Group s business model, which it has deployed successfully in the UK and more recently in the US, is well suited to the Australian and New Zealand markets. The Directors believe that the development of spin-out companies based on IP originating from the Go9 Universities represents a significant commercial opportunity. In addition to the opportunity presented by the launch of IP Group Australia, the Board believes that there is a significant opportunity to accelerate the growth of the Group by increasing its overall rate of investment in both its current portfolio and in new pipeline opportunities in the UK and the US, whilst preserving the returns that it has historically been able to achieve. As companies within the Group s portfolio mature, they generally require an increased level of investment, commensurate with their advancing stage of development, in order to achieve their technical, commercial and strategic objectives. The Board considers that, where such companies continue to make progress towards achieving these objectives, there can be advantages for the Group in maintaining significant minority equity stakes in these companies in order to seek to maximise its level of returns. The Board considers that the Group is in a highly advantageous position to assess the merits of further investments in its focus stage portfolio companies, given its well-established and in-depth understanding of the relevant company in each case. These investment opportunities are typically more mature (in that technology proof of concept has generally been achieved and demonstrated) and additional capital is required to bring the technology to, or towards, commercial validation. The Capital Raising will enable the Group to continue to have flexibility to lead these subsequent investment rounds in both existing and future focus-stage companies, decreasing its reliance on external capital and allowing it to maintain significant minority equity stakes with a view to continuing to generate strong equity returns. The Group established an original presence on the east coast of the US in 2013 and has since been growing and developing its operations in the US. The Group now has partnerships with three of the US s leading research universities (being University of Pennsylvania, Princeton University and Columbia University) and has recently entered into pilot agreements with a further two leading US research universities. The Group announced the formation of its first US university spin-out company in December 2014 and it now has holdings in a total of 11 companies based on IP developed in the US universities and DOE Laboratories with whom it has commercial collaboration agreements. The Directors believe that the US offers a profusion of opportunities to develop potentially world-class IP into spin-out companies and that it has seen only limited systematic commercialisation efforts from third parties to date. The Directors believe that the increased strength of the Group s balance sheet following completion of the Capital Raising will enable the Group to continue to build upon and strengthen its relationships with the US universities and other research institutions with whom it has commercial 4 Top Research classified as the top 10 per cent. of publications cited globally. Based on the top 200 universities volume of Top Research during Based on data from the Leiden University Rankings

12 agreements, in order to deploy capital into commercialisation opportunities based on potentially world class intellectual property arising from the same, and to further augment its reputation in the US marketplace. The Group will continue to seek to identify disruptive and compelling IP-based opportunities arising from its current UK Partnerships and its current agreements and initiatives within the US, as well as the agreements that it has entered into with the Go9 Universities. In addition, the Group may source further opportunities from or with other leading international research intensive institutions. The Directors believe that the increased strength of the Group s balance sheet following completion of the Capital Raising, combined with its expanded geographic footprint arising from the launch of IP Group Australia, will enhance the Group s profile internationally and therefore further its ability to: attract new early stage commercialisation opportunities from, and collaborations with, research intensive institutions in the UK, the US, Australia and New Zealand; attract and retain high quality talent within the Group; and attract experienced management teams and co-investment partners, as appropriate, into portfolio companies as they develop. Current Trading and Prospects Portfolio Update The Group's portfolio now comprises holdings in 50 intellectual property based companies categorised within the Focus or Development stage, a further 41 Early stage companies and 3 multi-sector platform holdings. The Group has deployed capital totalling 8.8m to 14 portfolio companies and opportunities. Outlook While it is clear that the UK and its economy are facing a period of uncertainty following the outcome of the UK's referendum on its membership of the EU, which may impact on specific funding rounds for companies, it is important to stress that the Group is seeing positive progress across the portfolio, has a strong balance sheet and operations in both the UK and the US. The Group is now commencing operations in Australia and New Zealand building upon the Go9 Agreements. Through diversifying internationally, the Company is reducing any Brexit risk. The Group was founded on the belief that modern economies need to support innovation in science and technology and to commercially leverage such innovation, and the Directors believe that this remains the case. Further, the Board believes that the fundamentals of the Group's business are strong and that the need for the commercialisation of science remains key. The Board is excited at the prospect of the Possible Acquisition which it considers potentially represents an opportunity to create a stronger UK commercialisation company with greater capabilities. Principal Terms and Conditions of the Capital Raising The Company is proposing to raise gross proceeds of up to approximately million (approximately million net of costs and expenses) by the issue of up to 142,857,136 Capital Raising Shares by way of the Firm Placing and the Placing, Open Offer and Offer for Subscription at 140 pence per Share, although the Directors have the ability to increase the size of the Issue by up to 47,571,428 Capital Raising Shares such that the gross proceeds would be approximately million (approximately million net of all Capital Raising costs and expenses) should there be sufficient demand. The Firm Placing is underwritten by Numis. Assuming that the Capital Raising is up to million, 96,428,566 Capital Raising Shares will be issued through the Firm Placing and up to 46,428,570 Capital Raising Shares will be issued through the Placing, Open Offer and Offer for Subscription. The Board considers the Firm Placing and the Placing, Open Offer and Offer for Subscription to be a suitable fundraising structure as it will allow access to a variety of new institutional investors to broaden 12

13 the Company s shareholder base whilst providing existing Shareholders with the opportunity to participate in the fundraising to an extent through the Firm Placing or the Open Offer and the Excess Application Facility. Qualifying Shareholders are being offered the right to subscribe for Open Offer Shares in accordance with the terms of the Open Offer. Qualifying Shareholders applying for their Open Offer Entitlements may also apply, under the Excess Application Facility, for Excess Shares in excess of their Open Offer Entitlements as described below. The Company is also seeking to place Placing Shares through the Placing and making the Offer for Subscription as described below. All elements of the Capital Raising have the same Issue Price. The Issue Price was set having regard to the prevailing market conditions and the size of the Issue and represents a discount of approximately 2.1 per cent. to the Closing Price of 143 pence per Share on 22 May 2017 (being the last Business Day before the announcement of the Capital Raising). The Board believes that both the Issue Price and the discount are appropriate. The Capital Raising Shares, when issued and fully paid, will rank in full for all dividends or distributions made, paid or declared after Admission and otherwise pari passu in all respects with the Existing Shares. 142,857,136 Capital Raising Shares are to be issued pursuant to the Capital Raising (representing 25.3 per cent. of the existing issued share capital) assuming that it is fully subscribed. On the basis that the Capital Raising size is increased to a maximum of million, the Capital Raising is expected to result in 190,428,564 Capital Raising Shares being issued (representing approximately 33.7 per cent. of the existing issued share capital). As noted above the Directors will have the discretion to increase the size of the Capital Raising from million to up to million. The Directors may allocate any increase to and between the Excess Application Facility, the Placing and/or the Offer for Subscription as they deem fit. Some questions and answers in relation to the Open Offer, together with details of the further terms and conditions of the Open Offer, including the procedure for application and payment and the procedure in respect of entitlements not taken up, will be set out in the Prospectus and, where relevant, will be set out in the Application Form. Details of the further terms and conditions of the Offer for Subscription, including the procedure for application and payment and the procedure in respect of subscription entitlements, will be set out in the Prospectus and, where relevant, will be set out in the Subscription Form. The Subscription Form will be contained in the Prospectus and will be available from the Company s website. Firm Placing The Firm Placees have conditionally agreed to subscribe for 96,428,566 Capital Raising Shares in aggregate at the Issue Price (representing gross proceeds of approximately million). The Firm Placed Shares are not subject to clawback to satisfy the valid applications by Qualifying Shareholders under the Open Offer and the Excess Application Facility and are not part of the Placing, Open Offer or Offer for Subscription. The Firm Placing is underwritten by Numis. The terms and conditions of the Firm Placing and Placing will be set out in the Prospectus. Open Offer The Directors recognise the importance of pre-emption rights to Shareholders and consequently 43,478,612 Capital Raising Shares are being offered to existing Shareholders by way of the Open Offer. The Open Offer provides an opportunity for Qualifying Shareholders to participate in the Capital Raising by both subscribing for their respective Open Offer Entitlements and by subscribing for Excess Shares under the Excess Application Facility, subject to availability. To the extent that valid applications are not received in respect of Open Offer Shares under the Open Offer, such Open Offer Shares may be allocated to Qualifying Shareholders to meet the valid applications under the Excess Application Facility and/or allocated to the Placing and/or Offer for Subscription. 13

14 Open Offer Entitlements Qualifying Shareholders are being given the opportunity on, and subject to, the terms and conditions of the Open Offer to apply for Open Offer Shares at the Issue Price, pro rata to their holdings of Shares on the Record Date on the basis of: 1 Open Offer Share for every 13 Record Date Shares Open Offer Entitlements under the Open Offer will be rounded down to the nearest whole number and any fractional entitlements to Open Offer Shares will not be allocated but will be aggregated and made available under the Excess Application Facility and/or the Placing and/or the Offer for Subscription. If you have sold or otherwise transferred all of your Existing Ordinary Shares before the ex-entitlement date, you are not entitled to participate in the Open Offer. Qualifying Shareholders are also being offered the opportunity to subscribe for Excess Shares in excess of their Open Offer Entitlements pursuant to the Excess Application Facility as described below. Excess Application Facility Qualifying Shareholders may apply to subscribe for Excess Shares using the Excess Application Facility, should they wish. Qualifying Non-CREST Shareholders wishing to apply to subscribe for Excess Shares may do so by completing the relevant sections on the Application Form. Qualifying CREST Shareholders who wish to apply to subscribe for more than their Open Offer Entitlements will have Excess CREST Open Offer Entitlements credited to their stock account in CREST and should refer to the Prospectus for information on how to apply for Excess Shares pursuant to the Excess Application Facility. The Excess Application Facility will comprise Open Offer Shares that are not taken up by Qualifying Shareholders under the Open Offer pursuant to their Open Offer Entitlements and may include Capital Raising Shares not taken up under the Placing or the Offer for Subscription. The maximum amount of Capital Raising Shares to be issued under the Excess Application Facility (the Maximum Excess Application Number ) will be limited to: (a) the maximum size of the Issue (as it may be increased by the Directors by up to 47,751,428 Capital Raising Shares); less (b) the aggregate of the Firm Placed Shares, the Capital Raising Shares issued under the Open Offer pursuant to Qualifying Shareholders Open Offer Entitlements and any Capital Raising Shares that the Directors determine to issue under the Placing and/or the Offer for Subscription. Excess Applications will therefore only be satisfied to the extent that: (a) other Qualifying Shareholders do not apply for their Open Offer Entitlements in full; (b) where fractional entitlements have been aggregated and made available under the Excess Application Facility; (c) the Directors do not exercise their discretion to allocate Excess Shares to the Placing and/or the Offer for Subscription; and/or (d) the Directors exercise their discretion to increase the size of the Issue and allocate any further Capital Raising Shares to the Excess Application Facility. Qualifying Shareholders can apply for up to the Maximum Excess Application Number of Capital Raising Shares under the Excess Application Facility, although if applications exceed the maximum number available, the applications will be scaled back. Excess monies in respect of applications which are not met in full will be returned to the applicant (at the applicant s risk) without interest as soon as practicable thereafter by way of cheque or CREST payment, as appropriate. Placing To the extent that either (a) the Directors exercise their discretion to increase the size of the Issue and allocate any of such increase to the Placing and/or (b) any Capital Raising Shares are unallocated via the Excess Application Facility and have not been allocated to the Offer for Subscription, such Capital Raising Shares will be allocated and made available under the Placing. Shares will be allocated to Non- Firm Placees pursuant to, and in accordance with, the Placing Agreement. The Placing will not be underwritten by Numis and may be scaled back in favour of the Offer for Subscription and/or the Excess Application Facility. The terms and conditions of the Placing will be contained in the Prospectus. 14