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IP2IPO has enjoyed stunning success over the past year. But don't ignore other similar operators on AIM that could also produce stellar returns

During its first full year on AIM, the group has brought three university spin-outs to the market thus turning 'an aggregate investment of £739,000 into proceeds of £1 million and quoted shares worth over £24 million at the year end'.

Shares in IP2IPO itself have jumped 161 per cent to 717.5p since flotation in October 2003. This values the company at £306.5 million and compares with a net asset value of £62.5 million.

IP2IPO chooses to hold all its investments at cost, so the net value of the three investments on AIM – Offshore Hydrocarbon Mapping Synairgen and VASTox – should be added in. This gives a total net asset valuation of £86.5 million.

Investors are hoping that the group can replicate its initial success during the current strong new issues market. Certainly news that another spin-out, Proximagen, will float this month, with a potential value of £30 million, supports the heady valuation put on the group.

Rival players

However, rival groups also investing in early-stage opportunities have hidden value in their investments as well.

Take Angle, which joined AIM a year ago. Initially shares in the group, set up by former management consultant Andrew Newland, drifted from their 144p float price. But in recent months they have jumped to 171.5p. That values the group at £28.6 million, or three times October's net asset value of £9.6 million.

At that time, there was £7.2 million cash on the balance sheet. Like IP2IPO, Angle holds its investments at cost. But the group's only quoted investment, acquisitive software developer Corpora, is held at its latest mid-price on AIM.

Another Angle investment will shortly join AIM, when promising health drink producer ProVexis reverses into food marketing group Nutrinnovator, raising £10 million at the same time. Angle holds a 32 per cent stake in ProVexis, whose product CardioFlow, extracted from tomatoes, can reduce excessive blood clotting and so prevent heart attacks.

Angle's investment was worth £5.3 million, based on a round of fundraising conducted last spring, but this could jump if the CardioFlow drink becomes popular.

So far Angle has emphasised to investors the consultancy fees it takes from companies it advises rather than its own substantial investments. This aspect of the business generates greater revenues than IP2IPO's related business.

At the moment though, investors' attention is firmly fixed on the underlying investments, since they can be realised relatively easily during the current flotation frenzy.

Interregnum hopes

Interregnum, which started life as a venture capitalist, has also been trying to re-position itself in recent months. Its original incubator strategy turned sour during the tech downturn, losing it a lot of money and prompting it to move to seek out fees.

The group, still led by Ken Olisa, now wants to be seen as a 'technology merchant bank' and is taking majority stakes in wireless computing ventures. This portfolio is currently valued at £5.3 million, against Interregnum's market value of £6.4 million, at 7.4p a share. However, Olisa suggests that if these companies can be sold at twice their revenues then this would produce £20.2 million. All of this is very hypothetical.

More intriguing AIM-quoted enterprises for me are Billam, currently trading at 17.5p against a NAV of 34.7p; tech outfits Strathdon Investments and Sigma; and MBO specialists Springboard and Inflexion.

The latter was the largest investor in TV software group ANT, whose recent AIM float was heavily oversubscribed. Inflexion sold some of its ANT shares, garnering £3.15 million. This gives Inflexion an NAV of 20.8p a share, a premium to its 17.25p share price.