Investment magnate Jim Mellon is looking to raise up to £100m for an investment trust targeting biotechnology companies working at the cutting-edge of medical science.
The trust, planned for launch in March or April, will trade in small biotech firms including unquoted shares, of the type that have found favour with investing heavyweights such as Neil Woodford.
It will be managed by former Axa Framlington Biotechnology fund manager Andy Smith, who is chief investment officer at Mr Mellon’s fledgling specialist investment house Mann Biovest.
Outlining hopes for a fundraising of £50-£100m, expected to be led by broker firm Investec, Mr Mellon said: “There is nothing in the UK like this.
“It is going to invest purely in small biotech companies in the UK and Europe.”
The launch brings Mr Mellon, who made a fortune investing in emerging markets in the 1990s, squarely up against his rich-list rival Mr Woodford, who also plans to launch an investment trust imminently, investing partly in biotechnology.
He added that he welcomed the launch of a rival fund by Mr Woodford, which will draw even more attention to what he views as an underinvested industry.
Biotechnology is rising in popularity as an investment in the UK.
Proponents of the sector argue that the sequencing of the human genome has led to a golden age in the discovery of breakthrough new drugs. At the same time, they argue, the world’s aging population is creating a greater demand than ever for disease treatments.
The US has long had a major biotechnology sector but in the UK there is now a slew of micro-sized companies, many of which have been spun out of university research at Oxford and Cambridge.
Mr Smith and Mann Biovest already act as investment manager to Magna Biopharma Income, a Charlemagne Capital open-ended fund that targets much larger-sized pharmaceutical companies with a higher level of liquidity.
The fund was launched in December 2013 and since then its sterling share class has delivered a 28.1 per cent return compared to a return on the MSCI World Healthcare index of 36.6 per cent in sterling terms.
Isle of Man-based Mann Biovest was launched in 2012 and its founder Mr Mellon acts as chairman and advisory committee member. The group’s chief executive is Anthony Chow, a former analyst at ANZ Banking Group in Sydney.
Before working at Axa Investment Managers, Mr Smith previously ran the International Biotechnology Trust and the Bioscience Investment trust, two of the UK’s highest profile funds in the sector.