Integration of the management of fund investments
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Syncona Ltd
Integration of the management of fund investments
9 March 2018
Syncona, a leading healthcare company focused on investing in and building global leaders in life science, today announces a revised arrangement governing the management of its fund investments.
The agreement reflects the increasingly integrated nature of the fund investments team and the revised parameters for the management of the fund investments. It will, in particular, see Arabella Cecil, currently Chief Investment Officer of BACIT UK, engaged by Syncona Investment Management Limited (SIML) as Head of Fund Investments. The new terms are expected to reduce costs for shareholders over the term of the previous agreement.
Tom Henderson, Non-Executive Director of Syncona and CEO of BACIT UK, said, “This is a natural next step for Syncona after a very successful first year as a combined business. The strategic rationale for bringing the two portfolios together was simple; to enable the growth and success of the life sciences business with the fund investments providing a deep pool of capital to draw on. The process of combination has been overwhelmingly successful and it is clear that today we are one integrated team aligned behind the delivery of Syncona’s vision to create global leaders in life sciences. It therefore makes sense to reflect this new reality with a revised arrangement which will be accretive for shareholders.â€
Background:
In December 2016, the Syncona and BACIT UK teams came together to create a leading healthcare company with a portfolio of life sciences companies and a productively deployed evergreen funding base, enabling Syncona to take a long-term view on building global leaders in life science.
Over the past 14 months Syncona has successfully combined the fund and life sciences investment teams, who have worked increasingly closely together to support the key goal of meeting the capital requirements of the life sciences business. During this process the fund investment parameters and portfolio have evolved to increasingly focus on liquidity and capital preservation.
To reflect these changed parameters and in keeping with the increasing integration of the teams, a revised arrangement is being put in place to manage Syncona’s fund investments.
Revised arrangement:
The terms of the existing agreement with BACIT UK, put in place in December 2016, provided for management of Syncona’s fund investments for five years at an annual fee of 0.19% of Net Asset Value, with a further period of five years at 0.15% per annum subject to achieving certain return criteria in the first period. The revised arrangements being put in place are:
- Syncona has agreed with BACIT UK to terminate its existing Investment Management Agreement (IMA) on 31 March 2018. In recognition of the significant early cessation of the contract a fee will be paid to BACIT UK of £3.8 million. Tom Henderson, CEO of BACIT UK, has voluntarily elected not to receive any portion of this sum.
- These arrangements are expected to deliver significant cost savings to Syncona over the life of the original BACIT UK agreement and will reduce the maximum management fees incurred by the Company to 1.1% of NAV per annum, from 1.19%1.
- Arabella Cecil, currently Chief Investment Officer of BACIT UK, will be engaged by SIML as Head of Fund Investments with effect from 1 April 2018, supported by additional resource to be recruited.
- Tom Henderson will continue in his role as Non-Executive Director of Syncona
- Investment decision making will take place within SIML, overseen by an internal fund investments committee.
- An external third-party consultancy will provide quarterly risk and performance reporting, while an external, independent advisory board will meet bi-annually.
The transaction with BACIT UK to terminate the existing IMA is a smaller related party transaction under LR 11.1.10.R.
[ENDS]
Enquiries
Syncona Ltd
Siobhan Weaver
Tel: +44 (0) 20 7611 2031
+44 (0) 7921 822 994
Tulchan Communications
Martin Robinson
Lisa Jarrett-Kerr
Tel: +44 (0) 207 353 4200
(1) The IMA between SIML and Syncona provides for the reimbursement of SIML costs, up to a maximum of 1% of NAV. To reflect these new arrangements, the IMA has been amended to cap costs at 1.1%. SIML is a subsidiary of the Company.
Copies of this press release and other corporate information can be found on the company website at: www.synconaltd.com
This announcement includes inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No.596/2014 ("MAR"). The person responsible for arranging for the release of this announcement on behalf of Syncona Ltd is Andrew Cossar, General Counsel, SIML.
About Syncona:
Syncona is a leading FTSE250 healthcare company focused on investing in and building global leaders in life science. Our vision is to deliver transformational treatments to patients in truly innovative areas of healthcare while generating superior returns for shareholders. Our current investment portfolio consists of seven high quality companies in life science and a leading range of fund investments.
We seek to partner with the best, brightest and most ambitious minds in science to build globally competitive businesses. We are established leaders in gene therapy, cell therapy and advanced diagnostics, and focus on delivering dramatic efficacy for patients in areas of high unmet need.
Our fund investments represent a productively deployed evergreen funding base which enables us to take a long term approach to investing in life sciences as we target the best new opportunities and support our existing portfolio companies to grow and succeed.
Syncona is aligned with two of the premium charitable funders in UK science, the Wellcome Trust, original founder of Syncona, and Cancer Research UK, both of which are significant shareholders in our business. We make a donation of 0.3% of Net Asset Value to a range of charities each year.
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