Europe’s largest life sciences fund closes at £300 million

Image courtesy Abingworth Management ltd

Not only that, the fund’s target of £250 million was significantly oversubscribed but the London-based firm decided to stick at £300 million.

“While it is not unprecedented to be oversubscribed, we are well ahead of the pack [in terms of size],” said Abingworth’s managing director, Stephen Bunting.

From Abingworth’s perspective Europe’s biotech sector is now “coming of age and creating companies that are better than their equivalents in the US,” said Bunting. At the same time there is less competition for deals in Europe, and overall the market is less trawled.

The new fund will invest in around 20 companies at all stage of development from start-ups to quoted companies, with half expected to be in the US and half in Europe. Investment size will range from £7.5 million upwards per investment, after all private rounds of financing.

Bunting believes Abingworth’s ability to raise such a record sum rests on its long track record – it raised it first fund in 1973 - and on its geographical reach from London and Cambridge, UK, to Boston, Mass., and Menlo Park, California.

“We are better resourced and better established: other firms that are perfectly good have not been around so long and so take longer to raise money,” said Bunting. “We have critical mass and invested in staff at a time when other people were cutting back, and that’s paying off now.”

‘We don’t want to be lonely’

However, Bunting noted it is in Abingworth’s interest for there to be a fair population of other life sciences investors. “We don’t want to be too lonely: we want to be able to co-invest with people with their own networks and brains.”

So he is likely to be cheered by other news this week that Wellington Partners of Munich announced the first closing of its Ventures III Life Science Fund. Investors from Germany, the Benelux countries, the UK, the US and the Middle East have committed €50 million, with the pot expected to reach €120 million by the time of the second closing around June this year.

Among the investors are the European Investment Fund, Bear Stearns, Credit Suisse, Merifin Capital, the Messerschmitt Foundation, the National Technology Enterprises Company of Kuwait as well as large family offices and private investors from Germany.

Wellington partner Rolf Christof Dienst said the interest of European, US and Mid East investors in life sciences is increasing. “They recognise the huge potential of European biotech companies and are looking for ways to participate in those companies.”

The Wellington Partners III Life Science Fund will invest in innovative therapeutics, medical technology and diagnostics. Wellington Partners has backed European life science companies in each of these fields, including Actelion of Switzerland, Wavelight of Germany and NoemaLife of Italy in the predecessor funds, Wellington Partners I and Wellington Partners II

The new investments will be managed by a team led by Wellington founder Rolf Christof Dienst, partner Rainer Strohmenger, former BASF pharmaceuticals board member Erich Schlick and Actelion co-founder Thomas Widmann.

In many respects Strohmenger echoes Bunting’s comment saying, “One thing is clear: The high quality, innovative strength and relatively low valuation of European biotech companies now offer an ideal investment environment.”

January was a busy month for Abingworth. Apart from closing the fund, two of its portfolio companies Novexel and Prosena closed funding rounds, and the all-share acquisition of the US/UK genomics technology company Solexa Inc. completed. Solexa was founded by Abingworth around technology from Cambridge University, and subsequently backed into a quoted US company Lynx Therapeutics, with the investors in the original Solexa maintaining 77 per cent ownership of the combined entity.

The acquisition by Illumina Inc of San Diego valued Solexa at around $600 million. Last year Abingworth had another significant exit, when Pfizer Inc bought the DNA vaccines company PowderMed for an undisclosed cash sum.