Wealth Manager2 May 2021 21:48
Looks like some scope for upside is definitely possible after SUPP recent lows when Oxford Nanopore IPO goes to market in Q3
Wealth Manager
Schroder UK Public Private (SUPP), the ‘patient capital’ investment trust formerly run by Neil Woodford, hopes a £3bn-£4bn flotation by top holding Oxford Nanopore can turn its fortunes around after a painful 20% write-down this month.
Fund managers Tim Creed and Ben Wicks (below), who took over the closed-ended fund at the end of 2019 after Woodford resigned when his business collapsed, expressed strong belief in the British DNA sequencer. Nanopore accounts for 21.6% of the trust’s assets, making the stake worth £68.7m. Its plans to list offer a big potential boost to SUPP’s 31 December net asset value (NAV) which this month was slashed to 35.01p per share from 43.84p at the end of September.
Reaction to that has left the shares at 31.9p, less than a third of the 100p level they launched at six years ago.
The pair told Investment Trust Insider they held Oxford Nanopore at a valuation of £1.9bn, reflecting its last financing round more than a year ago. This is less than half the £4bn analysts at Berenberg have said Nanopore could achieve when it launches an initial public offer (IPO). It’s also less than the £2.3bn IP Group (IPO), a listed early-stage investment group, held the company on its books at the end of March.
Creed and Wicks would not be drawn on making projections but noted how Nanopore’s reputation had grown during the Covid-19 pandemic when its devices were used to track the spread of the virus in more than 85 countries.
‘It’s been nice to see the range of projections that other people are making and certainly we have a lot of confidence in the management team of the company to have a successful IPO and the continue to grow,’ said Creed.
He added they would not be ‘forced sellers’ when Nanopore goes public, as the limits on position sizes in the trust only apply to new investments.
Investec analyst Alan Brierley estimated if Nanopore floated at £3.9bn, as recent reports suggested, this would hike the trust’s NAV by around 23%.
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