Chinese firm pulls out of funding deal with IP Group

A CHINESE investor has pulled out of a £207m fundraising by FTSE 250 intellectual property firm IP Group, hitting the British company as it pursues a £490m hostile takeover of rival Touchstone Innovations.

IP disclosed to investors that Beijing Galaxy World Group, which describes itself as an intelligent business internet platform, had pulled out of its cash injection, worth £23m of the total, as China seeks to put tighter controls on foreign investments. It failed to get approval from Chinese authorities, IP said.

Other institutions committed to the funding round, including British asset manager M&G, Singapore’s Temasek Holdings and Australia’s Telstra Super are still investing as planned.

IP said its all-share offer for Touchstone of 2.2178 of its own shares for each Touchstone share would be unaffected. Touchstone’s board has vocally objected to the deal, with David Newlands, the chairman, saying it “fundamentally undervalues” the firm.

But most Touchstone shareholders have been won over, with IP’S offer enjoying 89.7pc support, just short of the 90pc needed to make it unconditional.