Investor in Oxford university spinouts raises £250mn

Oxford Science Enterprises, the investment company backing businesses spun out of Oxford university’s academic research, has completed a £250mn fundraising to support breakthroughs focused on science and technology.

The OSE rights issue involving existing and new shareholders cements the company as one of the biggest of its kind in the UK, with assets worth more than £1bn and investments in 80-plus spinout businesses.

Existing OSE shareholders include Huawei, the Chinese telecoms equipment maker that the UK government in 2020 banned as a supplier of kit for Britain’s 5G mobile networks.

Other OSE shareholders are Braavos Capital, Lansdowne Partners, Oxford university’s endowment fund, the Wellcome Trust and Temasek.

OSE will use the £250mn secured through the rights issue to increase investments in spinouts founded at Oxford university that want to commercialise breakthroughs in life sciences, health and so-called deep technology — which encompasses artificial intelligence, robotics and quantum computing, among other things.

These additional funds will allow us to create many more [spinouts], but importantly allow us to scale these companies quickly with much larger investments.

Alexis Dormandy, OSE chief executive officer, said the company had proved its model of “translating groundbreaking science into . . . transformational businesses” solving global challenges.

“Our companies are making remarkable breakthroughs from cancer, heart failure and infectious diseases, to climate change, food security and quantum computing,” he added.

Founded in 2015, OSE is separate from Oxford university but takes an automatic 10 per cent stake in businesses its researchers create.

Companies in OSE’s portfolio include Vaccitech, which contributed to the development of AstraZeneca’s Covid-19 vaccine, and ORCA Computing, which provided the Ministry of Defence with its first quantum computer.

Dormandy said several OSE-backed companies were at an “inflection point” where cutting edge technologies become ready for market after years of development.

Among these is First Light Fusion, which in June announced it had combined atomic nuclei — a groundbreaking step in generating clean energy from the reaction that powers the sun.

Chas Bountra, pro-vice chancellor for innovation at Oxford university, named low-cost ventilators, mass testing and vaccine technology during the pandemic as achievements of the higher education institution and its spinouts.

Referring to the OSE rights issue, he said: “These additional funds will allow us to create many more [spinouts], but importantly allow us to scale these companies quickly with much larger investments.”

Huawei became an OSE shareholder in 2018, and holds a 0.8 per cent stake.

Oxford university stopped accepting funding from Huawei in 2019, citing concerns raised about UK partnerships with the Chinese company.

The government decided to phase out use of Huawei kit in 5G networks in 2020 after lobbying by Donald Trump’s US administration, which raised concerns about national security. Tory MPs also lobbied against Huawei.

OSE confirmed Huawei had participated in the rights issue, adding: “Huawei is a small investor . . . None of OSE’s shareholders gets confidential information or access in relation to its portfolio companies. Investors do not get any more information than is publicly disclosed.”

Huawei declined to comment. Oxford university could not be immediately reached for comment.

OSE is one of several UK investment companies created to fund university spinouts.

The sector received £2.54bn in investment last year, an increase of 69 per cent compared with 2020, according to the Royal Society of Engineering.

Oxford university is the UK higher education sector’s top creator of companies, with 193 spinouts since 2011, according to Beauhurst, a data platform. Oxford now produces an average of 20 companies a year.