Launch of Modern Water

IP Group PLC
15 December 2006


For immediate release                                      15 December 2006





                       IP Group launches Modern Water Ltd



IP Group plc (LSE: IPO) ('IP Group'), the intellectual property
commercialisation company, is delighted to announce the launch of a new
subsidiary, Modern Water Limited ('Modern Water' or 'the Company'), to establish
and exploit a portfolio of water technologies to address the global problems of
economic availability of fresh water and the treatment and disposal of waste
water.



The creation of Modern Water forms an integral part of IP Group's strategy of
establishing businesses, run by specialist management teams, to address
particular issues affecting the global economy through the creation and
management of a portfolio of intellectual-property based investments. Modern
Water, which is building a portfolio of intellectual property based novel 'water
solutions', is headed by Executive Chairman Neil McDougall, one of the most
experienced water-industry experts with an impressive track record in this
sector. Simon Humphrey, who has over 16 years experience in the sector, is Chief
Executive Officer of Modern Water.



IP Group and Modern Water's management team have committed £2.2 million in cash
to Modern Water, and are delighted to announce that Modern Water has invested
£1.0 million of this commitment in three exciting water-related technologies.
These include an innovative and potentially cost-saving desalination process, a
technology that continuously measures acute water toxicity and a patented
process for flushing toilets with seawater rather than freshwater. Modern Water
is actively seeking further opportunities.



Modern Water is the second subsidiary that IP Group has created to address
issues of global importance, having launched Modern Biosciences in 2005 to
address the problem of poor product pipeline within major pharmaceutical
companies. IP Group has a 67.7% stake in Modern Water.



Modern Water's portfolio



Modern Water has taken a 30.0% stake in Surrey Aqua Technologies Limited ('
Surrey Aqua'), a spin-out from the University of Surrey.



Surrey Aqua has developed a unique 'reverse osmosis' process to purify salt
water that has significantly lower costs, using less energy. It is based on
technology developed at the Centre for Osmosis Research & Applications (CORA),
University of Surrey.



Dr Adel Sharif, Founder and Director of CORA, won the 2005 Royal Society Brian
Mercer Senior Award for innovations for his work on novel applications of
Manipulated Osmosis in desalination and water treatment processes as well as a
DTI Smart Award (Small Merit Award) for Research and Technology. Surrey Aqua
Technologies is currently in negotiations with major blue chip companies and
organisations to licence its technology.



Modern Water has a 16.6% stake in CYMTOX Limited ('CYMTOX'), a Cardiff-based
business which has a new water technology that monitors acute water toxicity on
a continuous, real time basis.



The CYMTOX technology is a water monitoring device that acts like a 'modern day
canary', constantly checking a very wide range of toxicity and warning of any
suspicious changes. It is capable of being fully automated and taking specific
computer controlled actions. The core technology, which is based on the very
well established science of bioluminescence, is in the process of being fully
patented. The technology has been proven to identify 1/1000th of a lethal dose
of cynaide in water in just 3 seconds compared to currently available products
that detect in 15-120 minutes.



CYMTOX's target markets are major sensitive customers who have a strong need for
confident protection against contaminated water including drinks and food
manufacturers, water treatment, supply and particularly distribution systems
through to the 'tap' and water sources (boreholes, rivers and reservoirs).



Modern Water also has a 51.0% stake in Poseidon Water Limited ('Poseidon'), a
South Wales-based company which has pioneered the 'Poseidon Water System'
process to enable toilets to be flushed with seawater rather than freshwater.



Independent statistics show that 30% of water used in hotels, tourist
facilities, offices and homes is used for flushing toilets. The Poseidon 'Sea
Water Cycle' is a viable alternative that could be made available to a
significant number of the world's population. Currently 350 million people live
in 'water stressed' areas while more than 70% of the world's population lives
within 50km of the sea.



Management



Neil McDougall, Executive Chairman of Modern Water, is a water investment expert
who led the highly successful acquisition of Mid Kent Group plc. A qualified
Chartered Accountant, Mr McDougall was also Chairman and one of the founder
shareholders of Bream Investments, a special purpose vehicle set up for the
attempted £4.4bn acquisition of AWG, the owner of Anglian Water. He has also
advised on a number of other water-based projects and acquisitions.



Mr McDougall was Chairman of Swan Group plc ('Swan'), the holding company for a
number of businesses including Mid Kent Water plc. Swan was set up in May 2001
to take private Mid Kent Holdings plc, a company quoted on the London Stock
Exchange, with £200m of funding from WestLB. It was sold in 2005, realising a
substantial surplus for the shareholders.



He was also Chairman and Chief Executive of Cascal, a joint venture between
Biwater plc and Nuon N.V. specialising in investing and operating domestic and
international water companies and public-private partnerships, and a director of
P&O Developments where he was responsible for P&O's property development and
investment portfolio in Continental Europe.



Simon Humphrey, Chief Executive of Modern Water, has been an Investment Manager
at Laing O'Rourke focussed on water-related opportunities and a director of Glen
Water Ltd, a 50:50 joint venture with Thames Water, the preferred bidder for
Project Omega, a £135 million wastewater PPP project in Northern Ireland. Prior
to that, Mr Humphrey was Investment Director at Spring Capital where he worked
with a large UK venture capital group on a bid for a UK water company and where
he also led a team to bid for two water companies in Chile. He was also
Investment Director at Cascal, where he was responsible for structuring,
financing and leading bids for a number of publicly owned water and wastewater
companies, having previously spent five years at Biwater in a number of roles
including financial analyst, financial controller, management accountant and
project manager.



Alan Aubrey, Chief Executive of IP Group, said: 'We are really excited by the
launch of Modern Water and are delighted to have attracted such a strong
management team. Neil and Simon are not only experts in this sector but also
have excellent corporate track records which will be invaluable to the Company.
Modern Water has ambitious plans to be the dominant player in water technologies
in the World and is starting life with three very promising opportunities.'



Neil McDougall, Chairman of Modern Water, said: 'Modern Water represents an
exciting opportunity to develop and commercialise technology for the water
sector, an area that has remained underdeveloped until now. I look forward to
working with IP Group who have excellent relationships with a number of
universities and have demonstrated a strong track record of bringing technology
to market.'



For further information, please contact:



IP Group plc                                    020 7489 5200

Alan Aubrey, Chief Executive Officer
Liz Vaughan-Adams (communications)              020 7489 5206/07979853802


Modern Water


Neil McDougall                                  07740 930 303

Buchanan

Tim Anderson, Mary-Jane Johnson, Mark Court    020 7466 5000





Notes for Editors



About IP Group



IP Group Plc is an intellectual property (IP) commercialisation company that
specialises in commercialising university technology. Founded in 2001, IP Group
listed on AiM in October 2003 and moved to the Official List in June 2006. It
has made two acquisitions to date - Techtran, a company set up to commercialise
university intellectual property under a long term contract with the University
of Leeds, in 2005 and Top Technology Ventures, an investment adviser to early
stage technology venture capital funds, in 2004.



The group has formed long-term partnerships with ten universities - the
University of Oxford, King's College London, CNAP/University of York, the
University of Leeds, the University of Bristol, the University of Surrey, the
University of Southampton, Queen Mary (University of London), the University of
Bath and the University of Glasgow.



As at 30 June 2006, 44 spin-out companies had been created among the group's
university partners. Of those, eight have listed on the AiM market of the London
Stock Exchange and there have been two trade sales.



For more information, please visit our website at www.ipgroupplc.com.



                                      ENDS


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