Allenby Capital - Frontier IP plc: Initiation

Frontier IP Group has conditionally raised £4.0m (gross) through a placing and subscription of shares at 12.0p and has announced a retail offer of up to £0.4m at the same price. We initiate this research to explain why we believe that Frontier’s share price seriously undervalues the intrinsic value of the Group’s maturing portfolio of companies. Frontier’s shares trade on a 68% discount to NAV, pre-placing, which in our opinion is wholly inappropriate given the Group’s near-term asset realisation opportunities, history of realisations and portfolio commercialisation potential. Applying the AIC Growth Capital sector average NAV discount of 43.4% to Frontier’s NAV of 52.7p would imply a share price of 29.8p.