Life sciences fund Syncona (SYNC) has withdrawn plans for a managed wind-down and will instead focus on returning £250m of capital to shareholders.
Following consultation with its biggest shareholders on its strategic options, Syncona Investment Management (SIML) will, however, continue to launch a new private fund for institutions once the board of the listed investment company has secured safeguards for its shareholders.
Shareholders told the company after its earlier announcement in June that they did not want to see its assets sold in a fire sale in an effort to get back their money.
With Syncona shares trailing on a long-standing discount of 41% below net asset value (NAV), the company says it will concentrate on realising value from its mature investments and return capital through share buybacks, a tender offer or special dividends.
Once £250m has been returned from the current £765m portfolio of 14 life sciences companies, Syncona will resume funding new and existing investments with the goal of long-term capital growth.
The revised approach will require changes to the board, which said it would consult on the new capital allocation policy, incentives for the fund management team and ways to cut the company’s costs.
Sycona said the revised proposals came against a background of good progress in the portfolio, “which is funded to deliver 10 key value inflection points over the next three years, with the potential to drive significant NAV growth.”
Chair Melanie Gee said: “Today’s set of proposals provides the company and SIML with a clear initial focus to maximise value in the portfolio and return cash to shareholders from the realisation of mature portfolio assets.”
Chris Hollowood, SIML chief executive, said: “We believe the revised investment policy, which we are firmly supportive of and aligned with, will deliver value for all stakeholders. Moreover, we remain confident in the long-term potential in the sector and believe there remains a significant opportunity to build late-stage life science companies that can deliver attractive returns for our shareholders, after £250m has been returned from realisations.
He added: “During this initial period, where our investment focus is predominantly on realising maximum value from portfolio assets, we will seek to raise a private fund, which would create a sustainable long-term platform to match the development cycle in life science and support us in maximising value for Syncona’s shareholders.”
Our view
James Carthew at QuotedData said: “Fundamentally, as a shareholder in Syncona I want to see it fund successful life sciences business for the benefit of patients as well as investors. Syncona’s new proposals look more palatable than the last lot, which I was worried would disadvantage small shareholders. However, vigilance will still be needed if a private fund is launched and it is used to acquire assets from the company.”
