U.K. investment guru Neil Woodford has landed his $1.2 billion tech fund, making it a record debut for an investment trust in the country.
Woodford plays a big role in the U.K.'s investment scene. And this new Woodford Patient Capital Trust--recently upsized to a now oversubscribed £800 million--will only make him even bigger--especially in the country's finally starved biotech sector.
His new investment vehicle plans to take stakes in private and public tech companies on both sides of the Atlantic, with a big appetite for biotech, adding that to a base of blue chip stocks that are intended to provide a base of dividends. Any returns up to 10% will be left unmolested as Woodford and his team plan to earn fees on gains once they step past that threshold.
"A look at conventional investment trust launches over the past couple of decades or so shows that a capital raise of more than £500m has been an extremely rare event," Craig Newman, CEO of Woodford Investment Management, wrote in a blog post. "So to raise more than £800m to invest in a previously overlooked asset class is a tremendous endorsement of the patient capital strategy."
The trust has "more than two-dozen early-stage and early-growth stocks in the pipeline," he adds.
Woodford's premier position in the City made him a key defender of AstraZeneca ($AZN) while Pfizer ($PFE) was attempting a much-criticized megamerger. And he's become a major investor in Northwest Biotherapeutics, which has been advancing a therapeutic vaccine for brain cancer.
Now his plans for this new trust includes more biotech investing, a role that is being eagerly awaited by a sector that is well known for world-class science but which has been starved of investment cash. Woodford recently sought to distinguish the frothy valuations U.S. biotechs are getting on Nasdaq compared to what equity in early-stage biotechs in the U.K. is going for these days.
"I think there is a bubble in some parts of the quoted biotech sector, certainly in the U.S. There are some pretty punchy valuations that I certainly wouldn't feel comfortable with," Woodford told The Telegraph recently. "But that doesn't describe all biotech valuations everywhere. In the unquoted space and in early-stage biotech companies in the U.K. there is no cross-contamination from Nasdaq valuations at all. These valuations of U.K. biotech businesses … frankly are on the floor."
- here's the Telegraph story