M&G Investments is pushing further into the private asset space by staking a claim in Neil Woodford favourite Oxford Nanopore ahead of its IPO later this year.
M&G was among the new investors to join in the DNA sequencing start-up’s latest £195m funding round, ponying up £35m.
Oxford Nanopore, which was founded after being spun-out from the University of Oxford in 2005, is planning to list on the London Stock Exchange in the second half of 2021.
The business is now valued at £2.5bn, up from its £1.7bn price tag at its last funding round a year ago. But analysts have said it could fetch between £4bn and £7bn, which would make it one of the largest floats in London this year.
M&G not traditionally known for investments in private companies
M&G’s investment into Oxford Nanopore has been made via its newly created Catalyst business. Its £143bn Prudential With-Profits fund allocated £5bn to the global investment team in February to plough into private companies with a sustainable bent.
“The technology developed by Oxford Nanopore is being used in a broad range of scientific research applications, including to further biomedical science, to characterise pathogens in microbiology and public health,” said M&G CIO Jack Daniels (pictured).
“This is an example of how institutional investors can play an important role in accelerating growth in companies that provide a wider benefit to society.”
7IM senior portfolio manager Peter Sleep said M&G is not known for investing in companies pre-IPO, an area which is dominated by a handful of players including Baillie Gifford and more recently Chrysalis Investments.
“The first big UK investor I am aware of doing pre-IPO investments was Woodford, but his due diligence and investment process was an unmitigated disaster,” Sleep said.
Woodford’s Oxford Nanopore success story
Disgraced stock picker Woodford was one of Oxford Nanopore’s largest backers before the implosion of his investment empire, holding positions in both his Woodford Equity Income fund and Patient Capital trust.
The 6% stake is his open-ended fund was sold by Link Fund Solutions to Acacia Research last summer during the fund’s wind-up. Last month Woodford’s former holding was revealed to form the bulk of the WCM Healthcare Portfolio, his comeback venture with Acacia.
Oxford Nanopore also remains one of the largest holdings in his former investment trust, Woodford Patient Capital, which was passed on to Schroders after the implosion of Woodford’s investment boutique. Around 14% of the trust, renamed Schroder UK Public Private, was held in the biotech firm at the end of September.
See also: Neil Woodford touts for institutional investors with details of eight-stock biotech portfolio
Willis Owen head of personal investing Adrian Lowcock said Oxford Nanopore’s recent success is a reminder that Woodford’s woes were not just down to poor stock selection but were “fundamentally more to do with portfolio management and governance”.
“In the aftermath of the collapse it was too easy to forget that companies like Oxford Nanopore were exactly the types of businesses that Woodford wanted to support and required seed funding and patient capital,” Lowcock said.
“They just weren’t suitable for a core equity income fund with an open-ended structure.”
