Temasek, the Singaporean sovereign wealth fund that is one of the world’s biggest investors, with a particular focus on cutting edge tech and biotech companies, is said to be eyeing up an ownership stake in Oxford Nanopore. The Oxford University spin-off, which has developed a ground breaking technique to read and sequence DNA, has become one of the UK’s largest private companies by valuation over the past few years. It was most recently valued at £1.8 billion.
Like many of the most successful start-ups in the tech and biotech spaces, Nanopore has still to turn a profit – ploughing its revenues back into further R&D to improve its technology, as well as growing market share. As such, the company still needs to continue to raise money by bringing on board new investment. It is reportedly currently working on a new £125 million fundraising round. The Sunday Times reported over the weekend that talks have already been held with Temasek over the fund’s interest in taking a stake in Nanopore but it is not clear if the involvement would form part of the man investment round or represent a separate investment.
The news will no doubt provoke a rueful response from Neil Woodford, whose flagship Woodford Equity Income Fund, had a significant holding in Nanopore. However, it is exactly the kind of illiquid investment that loss-making tech and biotech start-ups represent that proved to be the fund’s demise. While the company is believed to have a bright future, it is one that investors will need to be patient on.
The difficulty of selling on shares in companies not listed on a stock exchange is what led to a liquidity crunch at the Woodford funds when large investors began to lose patience and withdraw their capital earlier this year. They are now being wound up and investors will be returned as much of their initial investment capital as can be raised by selling off assets – including the Nanopore stake.
The Woodford fund’s holding in Oxford Nanopore was last valued, in June, at £111 million but could now be worth more depending on the valuation that new shareholders buy into the company at. Last month Nanopore announced its intention to issue 2.1 million new shares at £58 each. The Times reports that the company could help facilitate the sale of the Woodford Equity Income Fund’s shares in the company as part of that process.
If Temasek does make an investment in Nanopore, it will be the second time it has invested in the same company as Woodford. The sovereign wealth fund also invested almost £70 million in Benevolent AI in October – another tech start-up that was part of the Woodford fund’s holdings.
Oxford Nanopore, which makes machines that read DNA, as well as also selling the analysis of the readings, tripled revenues to £32.5 million but still sustained a £53.1 million loss. However, the revenues represented 300% growth on those of 2017, while losses were reduced from £56.5 million a year earlier. That could mean Nanopore is able to attract new investors at an even higher valuation than the £1.8 billion it achieved over its last investment round.