Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013

22379

Bellevue announces BB Healthcare biotech IPO

RELATED TOPICS​

Bellevue Asset Management is to launch a new biotech investment trust through an initial public offering (IPO). Dr Daniel Koller and Paul Major will be the portfolio managers of the investment trust which aims to raise GBP200 million and will be concentrated, with a maximum of 35 holdings. 

BB Healthcare will be managed by Bellevue, which has around USD4 billion (GBP3.3 billion) under management in the healthcare industry and a strong track record in the sector.  Bellevue also manages BB Biotech AG, Europe’s leading biotech investment trust with net assets of approximately GBP2.2 billion. The BB Biotech fund has achieved 15 per cent annualised TSR since 1993 and Koller has achieved 27 per cent annualised TSR since he took over management of BB Biotech in 2010.
 
The investment objective of BB Healthcare is to provide shareholders with capital growth and income over the long term, through investment in listed or quoted global healthcare companies. BB Healthcare’s specific return objectives are to beat the total return of the MSCI World Healthcare Index (in sterling) on a rolling three year period (the index total return including dividends reinvested on a net basis); and to seek to generate a double-digit total shareholder return per annum over a rolling three year period.
 
 The directors get paid in shares on a three year rolling basis and there will be a redemption option each year (without continuing investors being impacted), plus a dividend of 3.5 per cent which can be paid from capital if needed.
 
Koller explains that after 20 plus years of looking at the biotech sector, they are both familiar with the broader scope. “We wanted to launch a new product but didn’t want to cannibalise BB Biotech,” he says. “We wanted to exploit our expertise and go after great opportunities outside of the biotech sector as well.”
 
Major explains that the managers’ philosophy is to look at everything unconstrained by geography, sub sectors, market capitalisation. “We are trying to find the best stories to deliver on a three to five year view,” he says.
 
He divides the healthcare world into drugs, services (including facilities) and various products: “Nothing is off the table for us,” he says.
 
Biotech has had the bad boy reputation for being a bit of a bubble industry in the past but Koller defends it.
 
“The past of biotech was a bubble and it will be again in the future but it will be less extreme given that we have a broader base of established players going international.” Koller argues that there are more profitable companies in the sector than before and the small to mid-cap sector has the best ever filled coffers open to invest in innovative products.
 
“Our base case assumption is that the industry will do well in the middle to long term.”
 
Major also talks of the new maturity of the biotech sector. “Even 10-15 years ago, for a clever scientist working in a lab with a new approach to an unmet need for a medical disease, the world was a tough place and investors were reluctant to fund, but the world has moved on a lot since then. In terms of cancer treatments, your marketing is now presenting your results at a medical meeting and even manufacturing on a contract basis sector has matured. If you have a genuinely innovative idea then there are people to support you every step of the way from the lab to a commercial product.”
 
Neither manager is concerned about the likely Democrat return in the looming US election.
 
Biotech has not in the past responded well to emanations from Hillary Clinton or President Obama. However, they feel that the investment community over represents the risk side of things. “We see it as an additional opportunity in the shorter term,” Koller says.
 
Major says: “The issues for the US healthcare sector are broad and long standing. There are many things that need to be fixed. It is unlikely Hillary will even want a battle about drug pricing or specific aspects of health care. We see her as a continuity candidate looking to build on the legacy of Obama and broad health care reform.”
 
Their other point is that their investment time horizon is a long one and they look at multiple election cycles. Major says: “Our portfolio is designed to perform over the long term. If Hillary decides to tackle drug price inflation that would be fine because we would not be invested in companies that rely on price increases to support their business model. In a conviction portfolio, if we can’t identify where the profit comes from, we wouldn’t be invested with them.”
 
Brexit and the declining pound has given them little thought either, although the portfolio is enjoying its dollar to sterling returns, giving it a little currency oomph at the moment.
 
“We are running a global healthcare portfolio,” Major says. “The US market is the most important one and where most sophisticated venture capital funding lies. Also most companies tend to float in the US with US dollars as their reporting currency.
 
“For us, this is a sterling denominated fund but we are always going to have a dollar overweighting.”
 
With just 35 stocks, the portfolio will be concentrated but they do not foresee liquidity issues in a sector where a small company is below USD10 billion in market capitalisation.
 
Koller says: “There is plenty of flexibility.”

Latest News

Global index revenues increased 9.3 per cent in 2023, totalling a record USD5.8 billion, according..
Octopus Investments (Octopus) has announced it has launched a Natural Capital Strategy...
Research firm focused on Alternative UCITS funds, Kepler Absolute Hedge, has published its Market Intelligence..

Related Articles

Trends
The trend to buyout among the UK’s smaller defined benefit (DB) schemes continues with a slew of new sub GBP100 million deals announced this month alone...
The trend to buyout among the UK’s smaller defined benefit (DB) schemes continues with a slew of new sub GBP100..
Different flavours
In what is believed to be the first survey of its kind in the UK market, Nedgroup Investments, the investment-led, multi-boutique global asset manager with over USD20 billion under management, recently undertook a survey with 204 UK investment professionals, seeking insights into their perceptions and attitudes towards boutique asset managers...
In what is believed to be the first survey of its kind in the UK market, Nedgroup Investments, the investment-led,..
UK map
UK local government pension schemes (LGPS) are leading the charge on investment in private markets issuing tenders set to be worth billions of pounds in the coming years...
UK local government pension schemes (LGPS) are leading the charge on investment in private markets issuing tenders set to be..
The trend of private equity firms acquiring businesses in the professional services sector continues with CVC Capital Partners eyeing a possible buyout of EY’s Italian consulting branch...
The trend of private equity firms acquiring businesses in the professional services sector continues with CVC Capital Partners eyeing a..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by