NOMPU SIZIBA: Passive investment player Sygnia, through its investment vehicle the Sygnia OSI Fund, is one of the investors in the Oxford coronavirus vaccine trial, which is said to be gaining good traction and could possibly be on the market by the end of the year – which has been one of the reasons for providing some cheer to global markets. Sygnia’s CEO Magda Wierzycka recently tweeted about her excitement at the development, describing the vaccine as safe and being capable of inducing an immune reaction.
Well, earlier my colleague, Ryk van Niekerk, caught up with her on what she describes as a not-for-profit project.
RYK VAN NIEKERK: Magda, thank you so much for joining me. Tell us about Oxford Sciences Innovation – and how you managed to buy a stake in the company?
MAGDA WIERZYCKA: Oxford Sciences Innovation itself, Ryk, was set up in 2015 – and it really is a joint venture. It was envisaged as a joint venture between Oxford University and some of the largest asset managers in the UK. The objective was that asset managers put £600 million into a company structure, and they would have exclusive rights to the commercialisation of all IP originating out of Oxford on shared economics between the academic staff, Oxford University, and OSI.
Over those five years, they managed to spin out 81 companies, one of them being obviously Vaccitech and the Covid-19 company. But it was very much of a closed club. So you couldn’t buy those shares. They never became available for sale up until the middle of last year, where some active asset managers in the UK, similar to the US, faced huge outflows in that move of active investing to passive, and suddenly became forced sellers of absolutely everything they had.
And there were a couple of well-known asset managers in the UK, Neil Woodford being one of them, whom I knew had stakes in OSI. I approached them out of the blue and said I’m a buyer of OSI. They were very reluctant sellers, but it was very fortuitous in terms of our timing. Obviously I did not envisage Covid-19 hitting the world when they did. But we were very fortunate in the timing and, in fact, with that transaction and a few other transactions we’ve managed to build up an 18.5% stake in OSI. So we are the largest shareholders in OSI today.
NOMPU SIZIBA: It seems like a great investment. Where is it housed? Can investors get exposure to this company?
MAGDA WIERZYCKA: It’s a much broader proposition than just OSI shares. Obviously OSI is very interesting in terms of being the company that commercialises all the IP, but some of the companies that have been spun out of Oxford via the OSI route [are] even more interesting and even more exciting. And some of them already have valuations well north of £300 to £400 million in their own right, three to four years after foundation.
So what we decided to do, we set up the OSI opportunities obviously much more broadly than just OSI itself. They are all very exciting spin-out companies that are originating out of this ecosystem that one would also want to invest in.
In order to do that, we set up two private equity funds in Guernsey’s Braavos Capital I and Braavos Capital II – slightly different mandates. And those funds are a collaboration between Sygnia in the UK, but they are being managed by Braavos Investment Advisors, which is actually a family office of one of our non-executive directors who has been investing in the Oxford ecosystem and OSI since 2015. So he’s got a lot of expertise and investment teams that specialise in this.
And so for South African investors, the ways you can access those investments are obviously either offshore, going directly into Braavos funds, or more simply through Sygnia OSI Fund, which is an endowment policy in South Africa – and you basically invest in rands and you can disinvest at any stage should you wish to
RYK VAN NIEKERK: Magna, there are expectations that this vaccine can be very, very profitable, because there’s such a big need for it. What are the commercial prospects for this vaccine, and the possible yield for Sygnia?
MAGDA WIERZYCKA: It’s clients, obviously. But the vaccine originates from Oxford and Oxford University, and Oxford is adamant that it will not profiteer from a global pandemic. So the deal with Oxford and OSI is that, as long as Covid-19 is labelled as a global pandemic by the World Health Organization, and 12 months after, the vaccine will be manufactured and distributed at cost. So no profit can be made. And that’s also the deal that has been struck with AstraZeneca, which is the pharmaceutical company manufacturing this vaccine.
So the profit will only really materialise after Covid-19 is no longer a pandemic. I think that’s very positive. But the very fact that Covid-19 is projected to be something that is not dissimilar to a standard flu will require an annual vaccine. We do believe that the profits will come down the line, and obviously will accrue to our clients.
RYK VAN NIEKERK: Naspers subsidiary Tencent also owns a stake in OSI. How happy are the Brits about having such a big foreign shareholding in this company, which seems to be strategically a very valuable company.
MAGDA WIERZYCKA: A very good question! I think when we accumulated our stake – and we own 18.2% of OSI – which then in turn owns, I think, 30% of Vaccitech – we did it at a time when there was a lot of stress in the UK, active asset managers were selling, and certainly there was no pandemic on the horizon. This vaccine Covid-19 has brought a huge spotlight on OSI. And, with that spotlight, came a spotlight on composition of their shareholding. That clearly is something that the UK government now perceives as a strategic asset. I think in terms of the foreign shareholding, there was a fair deal of – maybe suspicion is a strong word – disquiet about it.
But it is what it is. It’s a company with shareholdings. Anyone could have acquired those shares.. And hence at the end of the day it’s the market.
NOMPU SIZIBA: That was Magda Wierzycka, the CEO of Sygnia.