Another day, another tech float on the way for London. This one involves proper technology too: cutting-edge DNA sequencing and analytics, as opposed to takeaway food delivered by bicycle. Oxford Nanopore’s likely arrival on the London Stock Exchange later this year is therefore very welcome. The UK market is short on life sciences companies capable of commanding multibillion-pound valuations.
Let’s not pretend, though, that the choice of London is some sort of national triumph. Oxford Nanopore was founded in 2005 as a spin-out from Oxford University. Its manufacturing and research base is near the city. And the company received a useful leg-up last year, courtesy of the UK government, via a contract for Covid testing worth up to £113m, which is not bad for a business whose revenues in 2019 were £52m. It would have been very unsporting to run off to the US to join the biotech brethren on Nasdaq.
The live question is what Oxford Nanopore is worth given that Covid has transformed prospects beyond mere testing. The company’s kit is used in identifying variants and the biggest long-term demand may lie in virus surveillance. An “analyse anything anywhere” philosophy has also taken the firm into territory ranging from cancer research to crop yields.
IP Group formally values its 15% stake at £340m, implying £2.3bn for the whole company, but that may be conservative. Analysts at Jefferies reckon £4bn based on comparisons with listed US rivals. Others go higher. A wide range of estimates is only to be expected at this point: this is a classic case of a “scale-up” story after several rounds of investment.
The reception for Oxford Nanopore may therefore tell us more about London’s real appetite for funding high-growth tech companies than either Deliveroo, which will limp across the line with a bottom-of-the-range price tag on Wednesday, or secondhand car merchant Cazoo, which grumbled about UK investors and took the US route. A healthy life sciences sector is the most interesting tech opportunity for London.
Saving Liberty Steel is by no means simple
Kwasi Kwarteng has done the easy bit. He, or rather the government, has refused Liberty Steel’s request for a £170m rescue loan. That decision will have taken about two minutes since the structure of the parent company, Sanjeev Gupta’s GFG Alliance, is indeed “opaque”, as the business secretary put it.
But is there an actual plan to save Liberty Steel if the collapse of Greensill Capital, the main lender, proves terminal? At the moment Kwarteng is at the “all options open” stage, which presumably is a hint that some form of temporary public ownership, as with British Steel in 2019, would be contemplated to save thousands of jobs.
There are at least two complicating factors, however. First, Liberty is an amalgam of several businesses. The position could become messy if Gupta succeeds in re-financing some, but not all, of his UK operations.
Second, British Steel was eventually steered into the arms of Jingye – a Chinese firm, as many are in the steel business. This time any deal involving Beijing is surely impossible in a political climate of sanctions. So the pool of potential buyers may be shallow.
A complete list of options, then, would include a more full-throated, or longer-lasting, form of nationalisation. One could make an easy case for attempting a publicly funded reboot. Liberty’s Rotherham plant has two electric arc furnaces, which fit exactly into the government’s industrial decarbonisation drive. And the operation in nearby Stocksbridge makes high-spec steel for the aerospace industry, the added-value end of the market.
Does the government’s scenario-planning include such a medium-term project? It should if it still has a half-claim to having an industrial strategy.