ALEX BRUMMER: British biotech comes under attack from the private equity contagion
Among reasons not to buy into the declinist and defeatist agenda, which has become the lodestar of Britain’s political debate, is that the UK has an economy more fit for purpose in the 21st century than many of its competitors.
Germany is suffering because of an over dependence on manufacturing and exports at a moment when China, having exploited Western know-how, is able to do much more for itself.
In the last week or so, the temporary breakdown of the air traffic control system (NATS) and the muddled response to the RAAC concrete crisis in schools has exposed under-investment in British public services.
But it is worth bearing in mind that among the biggest investors in NATS are the main carriers using UK airports.
No one could be better placed to know about the shortcomings of back-up systems or put heft behind greater investment.
Takeover target: British biopharmaceutical services provider Ergomed has come under attack from private equity outfit Permira
Despite setbacks, what is encouraging about the UK is the things we do well.
We may lag behind Germany in manufacturing but are fortunate to have robust growth sectors. Defence and aerospace, where Berlin is at the starting gate, are among them.
A much desired goods trade agreement with India may be some time arriving. But if onerous restrictions on financial services could be eased, it would be bonus for a City already looking to the Pacific. Only last week Prudential laid out its plans to expand in India and Africa.
We ought to be taking great pride in the UK’s innovative capacity. It has been demoralising in recent years to see so many defence-engineering firms fall into the hand of overseas rivals or private equity.
Among those swallowed are flight refuelling pioneer Cobham, sonar maker Ultra Electronics and satellite champion Inmarsat. All departed the London stock market into hands beyond the UK’s control.
In the last several weeks, the same kind of contagion has hit our start-up pharma and biotech sectors.
Latest under attack is British biopharmaceutical services provider Ergomed, bid for by private equity outfit Permira for £703million.
his may be a big payday for founder and chairman Miroslav Reljanovic whose stake is valued at more than £120million.
Permira’s record is not without controversy. Among other things, it could be held responsible for defenestrating the reputation and performance of the AA motoring organisation.
Ergomed would be the third biotech firm to be taken off the London market in recent months after the £4.5billion deal for UK veterinary drug maker Dechra by EQT in June.
Others in the frame are the Danaher deal for Cambridge-based – but Nasdaq quoted – Abcam and last week’s £203million proposed takeover of Instem by France’s Archimed.
Amid a lull in global mergers, deals among UK health start-ups are surging in a tribute to the nation’s vibrant research base.
In allowing this to happen, the UK risks surrendering competitive advantage and breaking faith with a science legacy.
Group think
Among Gordon Brown’s achievements was the way he made amends for his responsibility in the great financial crisis by launching a G20 process which helped to avert global catastrophe. The former PM saw the G20 as a way of bringing China and newly rich nations into global decision making. The G20 gathering in New Delhi this coming weekend shows that after 15 years, the forum may have outlived its purpose.
China’s supreme leader Xi Jinping has decided to give the event the slip. Russia’s leader Vladimir Putin is persona non grata and Saudi Arabia’s Mohammed Bin Salman is on the human rights naughty step.
The G20s stalemate offers the G7 group of rich countries a chance to reassert its supremacy. Instead of being overtaken by China, as widely predicted, the US has sprinted away in terms of GDP and innovation.
And the G7 could act as an economic bulwark against the radicalised BRICS – Brazil, Russia, India, China and South Africa.
There is one big problem on the horizon for the G7: a potential second coming for Donald Trump.
Strong armed
Softbank and advisers are rapidly recruiting cornerstone investors for Cambridge-based Arm’s listing in New York, with tech giants Nvidia (a failed bidder) and Apple among candidates.
Advisers have cut the likely value of the initial public offering from £51billion to £44billion. Given a starry cast list of investors, there may well be a premium.
