Alibaba Backer Wellcome Trust Said to Shop Venture Fund StakesSabrina Willmer
The Wellcome Trust, the world’s second-biggest medical charity and a backer of the Human Genome Project and Alibaba Group Holding Ltd., is looking to sell $750 million in venture capital fund stakes as a resurgence of interest in the asset class lifts prices.
The London-based trust hired Cogent Partners to manage the sale of the stakes, which are illiquid and don’t trade on an exchange, said two people with knowledge of the situation, who asked not to be identified because the information is private.
Venture capitalists are seeing their best returns since the late 1990s dot-com bubble after twelve VC-backed companies went public in the U.S. last year with market capitalizations above $1 billion at the time of offering. Alibaba, the Chinese online marketplace, filed this week for an IPO and may raise as much as $20 billion.
“We review our portfolio constantly as part of a normal process of asset management,” according to an e-mailed statement from Mark Henderson, a Wellcome Trust spokesman, who confirmed the Alibaba stake. The trust has written in recent annual reports that it’s pursuing a policy of concentrating holdings into fewer, larger positions.
Bill Murphy, a managing director at Cogent, which advises institutional investors on the secondary market declined to comment. The average high price for venture fund stakes hit 80 percent of net asset value during the second half, the highest level in more than six years, according to a January report by the investment bank. Secondary stakes typically sell at a discount.
Wellcome Trust’s venture capital funds returned 18 percent for the year ending Sept. 30, according to the firm’s 2013 annual report, the same as the trust’s overall return in the last fiscal year. Venture capital accounted for about 8 percent, or 1.4 billion pounds ($2.4 billion), of the 17.3 billion pounds in trust assets as of Sept. 30.
“Having significantly increased our exposure to public and private equity holdings in the years 2008 to 2011, when many investors had become risk-averse, we have reaped the rewards in the last two years as they have again embraced risk assets,” Chairman William Castell wrote in the report.
The trust was formed in 1936 under the terms of the will of Henry S. Wellcome, co-founder of Burroughs Wellcome & Co., a forerunner of GlaxoSmithKline Plc. It is providing 120 million pounds toward the construction of the Crick Institute, a science research center in London. Among medical research charities, the trust’s endowment is exceeded only by that of the Bill & Melinda Gates Foundation in Seattle.