The university’s spin-out, chaired by Lord O’Neill, former finance minister and economist Goldman Sachs, has secured support from a pair of large local government pension funds as part of an initial fundraising of £ 215 million.
Sky News understands that the Greater Manchester Pension Fund and the West Yorkshire Pension Fund have joined a number of large institutional investors in supporting the new instrument, a collaboration between the universities of Leeds, Manchester and Sheffield.
The first fundraising closure, which will be widely announced on Friday, will be a key milestone for the company North Gritstone.
Chaired by Lord O’Neill and as CEO, Duncan Johnson, former head of Caledonia Investments’ private equity firm, aims to raise up to £ 500 million to support early stage businesses.
He intends to become one of Britain’s most prolific investors in academic spin-outs and intellectual property-rich businesses.
Other supporters of Northern Gritstone include M&G Investments, Lansdowne Partners and Andrew Law, CEO of the Caxton Associates hedge fund, which invests in personal ownership.
“The strong support from Northern Gritstone that we have seen from investors testifies to the huge range of opportunities in the world-class North England science and innovation centers and the spinners they produce,” said Lord O’Neill.
“By investing in Northern Gritstone, asset managers are directly buying the clearest prospects for the future British economy.”
He added that fundraising will allow the company to “deliver its philosophy of ‘profitable’, which is the basis of everything we strive for.”
The first closure of the fund is expected to be followed quickly by announcements of its inaugural investments.
Sky News announced last year that it will focus its investment activities on fast-growing sectors such as advanced materials, medical technology, cognitive computing and AI.
“There is a great deal of enthusiasm for the innovative, science-driven spin-outs emerging from our leading research universities and the ecosystems they support, and this has been reflected in our investor talks so far,” Johnson said.
He argued that the presence of a company such as Northern Gritstone “would accelerate the development of a northern innovation center that would compete with Britain’s Silicon Fen and eventually Silicon Valley.”
Northern Gritstone aims to take advantage of one of the world’s leading combined groups of researchers, academics and graduate students – with universities in Leeds, Manchester and Sheffield, home to 38 Nobel laureates.
Its founding universities reportedly produce almost 10% of all patents and one-fifth of all intellectual property licenses filed by higher education institutions in the United Kingdom.
:: Listen and subscribe to The Ian King Business Podcast here.
Comparable university spin-out companies, such as Oxford Sciences Innovation, have grown into large “unicorn” companies.
The new investment company, advised by Lazard bankers, appears to have chosen a favorable start-up period, with considerable government attention and resources focused on the balancing agenda outlined by Boris Johnson in his general election in the 2019th campaign.
While critics of the government say it is moving too slowly to comply with the manifesto, vehicles like the Northern Gritstone can be helped by political backwinds.
Alex Seddon, M&G’s Catalyst team leader, said: “British universities have a growing reputation for exceptional research capabilities, successful spin-outs and innovation centers, but institutional capital remains concentrated in the south.
“The power around Northern Gritstone is fueling a thriving northern risk ecosystem and expanding access for investors to promote exceptional talent from across the UK.”