The managed wind-down of Schroders Capital Global Innovation (INOV), the former Woodford Patient Capital Trust, has caught the attention of financier Hugh Osmond and the senior private equity team at Sun Capital Partners (SunCap).
A stock market filing this week showed that Osmond, a veteran deal-maker who bought Pizza Express and helped consolidate the pub and life insurance sectors running Punch Group and Pearl, is among a group of Sun Capital partners who have established a 5.4% stake in the £95m investment trust.
The notice of the £5.1m position stated SunCap only held the shares indirectly and that the ultimate controlling persons were Osmond and the owners of the firm, Edward Hawkes, Marc Jonas, Marcus Waley-Cohen and Edward Spencer-Churchill. SunCap boasts a 25-year record of over £15bn in transactions.
It is not known when the SunCap partners bought into the trust, which in July returned £37m to shareholders in the first return of capital since investors voted to wind down the trust in February.
This followed a dismal period for the shares which had failed to recover after Schroders took over as fund manager at the end of 2019 following the collapse of former manager Neil Woodford’s business and the suspension of his equity income fund.
Having raised £800m at its launch in 2015, Schroders Capital Global Innovation has plunged 86% over 10 years. However, the shares have rallied over 50% in the past year, pulled up by the prospect of a disposal of its assets realising hidden value.
At 15p, the shares stand at a 30% discount below net asset value. Osmond and the SunCap investors may be betting that valuation gap could close as the company returns more money from selling its assets or seeing its private equity holdings float on the stock market.
Atom Bank and Revolut, the payments app, for example, are both reported to be considering initial public offers that could be significant for the trust, which has 22% of assets invested in the fintechs.
Revolut last month saw its valuation jump to $75bn from $45bn a year ago as a result of a share sale in the unquoted company by employees.
While the trust’s performance has been hobbled by the legacy holdings of Woodford, it has had success in the life science investments overseen by its Schroders fund managers Tim Creed and Harry Raises. The payout in July was largely made possible by the sale of Araris Biotech to Taiho Pharmaceuticals this year. That lifted the trust’s £2.6m investment in 2022 to £17.8m.
Half-year results to 30 June showed the private equity holdings were boosted by a £6.6m gain in artificial intelligence company II, although this was offset by writedowns of positions in Ada Health, a medical app provider, and Agrostar, an Indian agritech platform.
