- Investment manager wants to terminate contract
- Current fund managers to stay on for smooth transition
- Likely to be strong interest from other fund managers
Biotechnology specialist International Biotechnology Trust (IBT) said investment adviser SV Health Investors had given notice to terminate the management of the trust from 9 February 2024 or earlier if agreed by the parties.
SV Health Investors wants to focus on its healthcare venture business where it manages more than $2 billion of assets.
SMOOTH TRANSITION
The board of IBT said it had instructed its advisors to commence ‘an independent process’ to review the company’s options to ‘ensure continuity of shareholders' exposure to the sector for the long term.’
Current fund managers Ailsa Craig and Marek Poszepczynski will continue to manage the quoted portfolio while Kate Bingham and Houman Ashrafian will manage the unquoted part of the portfolio during the review process.
Managing partner Bingham, who was head of the government’s vaccine taskforce, commented: ‘We will be working with the board of IBT to ensure a smooth transition over the coming months and look forward to a continued relationship with IBT as an investor in SV Health's venture and crossover funds.’
The shares gained 1.1% to 728.2p and are up 11.5% over the last year.
‘SIGNIFICANT’ INTEREST FROM MANAGERS
Analysts at Numis said SV Health Investors’ decision to focus on its core business wasn't a huge surprise and it expected ‘significant’ interest in the investment mandate from other fund managers given the £294 million market cap and £298 million of assets.
One potential sticking point over coming months which could see some pushback from shareholders relates to performance fees.
The company said the investment management agreement has been amended to clarify the manager’s entitlement to receive performance fees and deferred fees covering the period until the termination date.
These are capped at 2% of net asset value for annual performance fees and 4% for deferred performance fees, subject to an aggregate cap of 4.99%.
In the last three months, the fund has performed well after delivering a 4% increase in total net asset value compared with 3% for the Nasdaq biotechnology index.
Performance was helped by a 1% uplift from the unquoted portfolio earlier in February following an 0.8% uplift in December, while the quoted part of the portfolio benefited from Amgen’s (AMGN:NASDAQ) takeover of Horizon which added 2.7% to net asset value.
Over the last 10-years, IBT shares have delivered a compound annual return of 15.6% a year compared with 10.4% for the biotechnology sector according to Morningstar data.
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