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DNA Firm Oxford Nanopore Plans $649 Million London IPO

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(Bloomberg) --

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Oxford Nanopore Technologies Ltd., the DNA-sequencing company, plans an initial public offering that could raise as much as 476 million pounds ($649 million), capitalizing on the success of its pandemic work to fund future growth.

The deal values the University of Oxford spinoff backed by Oracle Corp. as high as 3.8 billion pounds, according to terms seen Thursday by Bloomberg. That’s about $1 billion more than during its last funding round, and places the company among the U.K.’s most valuable startups.

Oxford Nanopore has put its sequencing to work in the pandemic as researchers used its technology to characterize the genome of the SARS-CoV-2 virus and then to identify and track worrisome variants. The decision to sell shares in London comes as a boost to the U.K.’s ambitions to keep homegrown businesses from fleeing to the U.S. in search of investors, especially after Brexit.

The Oxford-based company seeks to raise 350 million pounds, according to the terms. Existing investors will sell as much as 126 million pounds in stock. The shares will be marketed at 375 pence to 450 pence each through Sept. 30, and start trading the next day.

The startup was worth about 2.5 billion pounds during its last funding round in May, based on the valuation that shareholder IP Group Plc assigned to its 14.5% stake. Another DNA sequencing firm, the U.S. giant Illumina Inc., is currently valued at more than $68 billion.

Oxford Nanopore has said the IPO proceeds will help it draw nearer to a goal of enabling “the analysis of anything by anyone, anywhere.” While many customers use its sequencing for scientific research, the company has highlighted potential in other areas such as food safety. Its technology has been used to assemble the genome of lungfish, better analyze different forms of cancer and monitor ecosystems for conservation. During the pandemic, it also provides Covid test kits to Britain’s National Health Service.

Special Shares

The biotech has adopted a controversial equity structure designed to give founders a special class of shares with extra power to block an unwanted takeover. Gordon Sanghera, its founder and chief executive officer, will receive what’s known as limited anti-takeover shares.

The share structure means that Oxford Nanopore will be ineligible for inclusion in the FTSE stock indexes. Some analysts say the structure helps London compete with New York in attracting innovative founder-led startups, while a number of institutional investors say the system erodes shareholder rights.

Read More: U.K. IPOs Look to Make Extra Voting Rights Palatable

If there’s enough demand, underwriters can sell additional shares, which increase the size of the offering to as much as 547 million pounds.

Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. are global coordinators of the offering. Barclays Bank Plc, Berenberg, Guggenheim Securities, Numis Corp Plc and RBC Capital Markets are joint bookrunners.

(Updates with valuation leap in second paragraph, bookrunners in last)

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