LONDON ¿ Merlin Biosciences, a European venture capital group, announced the first closing of the Merlin Biosciences fund after receiving commitments totaling Euro112.5 million (US$107.5 million).
Chris Evans, founder of Merlin Biosciences, said the first close was not an end in itself. ¿Our aim now is to quickly achieve our target of Euro200 million and begin to process the considerable deal flow we have identified.¿
The fund will invest in unquoted companies across Europe. The focus will be on undervalued companies and on exploiting the growing number of consolidation and buyout opportunities in the sector. Merlin, which is based in London, will invest Euro7.5 million to Euro12 million per company, taking a significant minority stake and a seat on the board. It will aim to exit within three to five years.
The European Investment Bank (EIB), which is owned by the member states of the European Union, is making its first investment in biotech via the fund. It has committed Euro37.5 million to the first tranche and will invest a further Euro12.5 million once the fund has raised Euro187.5 million.
The EIB has a brief to invest in projects that further European integration, and part of its mission is to promote employment in small and medium enterprises (SMEs). It has substantial reserves earmarked for venture capital support of high-tech SMEs.
The German investment bank West LB has committed Euro37.5 million to the fund through its subsidiary West LB Europe (UK) Fund Ltd.
Merlin said the remaining investors are predominantly leading institutional investors from throughout Europe.
Evans noted, ¿There are many opportunities for creating significant shareholder value out of European bioscience for investors with the right skill set and approach, especially in the unquoted sector.
¿We have already identified excellent investment opportunities and look forward to creating future value through targeting the equity gap between start-up and IPO.¿
There are currently about 1,000 unquoted companies in Europe. Evans believes that while they have valuable scientific assets, many are inadequately managed and most are inadequately funded.