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Mar 20, 2012

Wellcome Trust to Set Up £200M Investment Business Focused on Startups

  • The board of governors of the Wellcome Trust has approved the creation of an investment business that will focus on emerging companies and technologies. It will initially receive £200 million from the Wellcome Trust's endowment.

    The business is currently operating under the title Project Sigma, and a name and brand identity will be announced later. Sigma investments are expected to typically be in start-up firms. The new entity will allow the Trust to take ownership positions in the firms.

    Martin Murphy, who will serve as chief executive, said to the Financial Times (FT) that in the coming months he would build a team of four to eight employees, adding that he expected to make individual investments from a “few hundreds of thousands of pounds" to “more than £50m" and take equity stakes from 20% to full control in the targeted companies. He said he hoped to find other funders to co-invest alongside Sigma.

    Returns are expected to be in line with its existing venture private equity investments, which generated an annualized return last year of 17% and an internal rate of return of about 64% since 1994, Peter Pereira Gray, managing director of the Trust's investments division, told FT.

    Life sciences now represent only a few percentage points of the Trust's £15 billion endowment, he told FT, including equity stakes in a few large quoted drugmakers such as Novartis and Johnson & Johnson. The Trust’s latest annual report noted that £148 million was placed in life sciences and healthcare.

    “The Wellcome Trust is known as an investor that takes a long-term view,” comments Sir Mark Walport, director of the Wellcome Trust. “Sigma will extend this successful approach to direct investments in emerging healthcare technologies to give small- and medium-sized companies the support they require to fulfill their potential.

    “This important investment opportunity will help the Trust to fulfill its vision of achieving extraordinary improvements in health, by generating returns that can be used to fund the work of outstanding researchers in the biomedical sciences and the medical humanities.”

    --
    To read the story from the Financial Times, click here.


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