Schroder UK Public Private (SUPP ) shares have slipped after the former Woodford Patient Capital Trust said it will sell some of its big holding in Oxford Nanopore when the highly-rated UK biotech company floats next month.
The announcement yesterday came as Oxford Nanopore revealed US IT giant Oracle would take a 15% cornerstone stake as part of a strategic partnership.
Oracle, which has a market value of $239bn (£173bn), will subscribe for £150m of new shares in Oxford Nanopore, which is currently valued at £2.5bn.
This will account for half of the £300m the maker of portable DNA sequencers hopes to raise in the initial public offer (IPO) which should leave its shares with a 25% free float on the London Stock Exchange.
As part of the collaboration, Oxford Nanopore said it would migrate its data analysis platform to Oracle’s cloud infrastructure in a first step to explore potential opportunities in applied and clinical markets for Nanopore’s handheld devices.
SUPP held nearly 22% of its £363.5m net assets at 31 March in Oxford Nanopore’s unquoted shares, to give it a 3.7% stake in the company whose sales have been boosted in the Covid-19 pandemic.
‘While the company remains highly confident of Oxford Nanopore’s prospects to realise a strong IPO and generate continuous shareholder value, given the large position in the company’s portfolio, the company will seek to further diversify its portfolio though a partial realisation of its holding,’ SUPP said.
The sale will take place through a limited secondary offer by which Oxford Nanopore will enable some of its early backers to make an exit.
Supp shares were steady yesterday but dipped 0.6p or 1.7% to 32.9p today, down from the 35p they jumped to last week after Oxford Nanopore confirmed its intention to float. This prompted Stifel analysts to upgrade the stock to ‘buy’.
Investors, whose shares languish at a third of their launch level six years ago, will hope the trust crystallises a gain on its £90.7m stake in Oxford Nanopore. Analysts at Jefferies have forecast the company could achieve a £4bn valuation after flotation based on its sales targets.
SUPP fund managers Tim Creed and Ben Wicks said they will use the proceeds to invest in existing and new portfolio companies.
The trust will release a further update once an IPO share price has been set.
At yesterday’s close of 33p, SUPP shares stood on an 18% discount to their 40p of net asset value (NAV) per share at 31 March. The NAV rose 14.3% in the first quarter helped by revaluation of Oxford Nanopore and the sale of stakes in Kuur Therapeutics and sale of Inviata.
SUPP is not the only investment company with an interest in the much anticipated flotation. IP Group (IPO) owns 14.5% and Baillie Gifford’s £1.5bn Edinburgh Worldwide (EWI ) trust held 1.1% of its assets in the unquoted stock at the end of June.
Investment company news brought to you by Citywire Financial Publishers Limited.