DNA sequencing technology start-up Oxford Nanopore has picked London for an initial public offering later this year, giving the UK market a boost as ministers scramble to reform listing rules to attract innovative tech firms.
The Oxford-based company is likely to be one of the largest floats this year in London, with analysts valuing it at between £4bn to £7bn.
Oxford Nanopore will be the latest tech company to choose London after Deliveroo, although the UK was overlooked by used car seller Cazoo, which decided this week to list in New York through a special purchase acquisition company.
Deliveroo on Tuesday said it would price its own IPO at the bottom end of its initial range.
Oxford Nanopore was valued at £1.7bn in a funding round last year, but is held in the books of the IP Group — one of its investors — at £2.3bn. Other investors include China’s Tencent, Singaporean sovereign wealth fund GIC and Abu Dhabi tech company G42, as well as institutional funds including Schroders, Odey Asset Management and Lansdowne.
Berenberg said the group “could comfortably reach a valuation above £4bn at its next funding event, particularly given the company’s value appreciation and technological progress compared with those of publicly listed peers”.
Biotech and life sciences have been a particular focus of Boris Johnson’s government, with officials hoping to create a cluster of specialist firms in the UK.
The UK wants such companies to stay and grow rather than sell to overseas rivals. Ministers last month endorsed a review into the London listing regime to help keep tech companies in the UK, with founder-friendly reforms such as greater scope for dual share classes.
Oxford Nanopore has benefited from a surge in demand during the pandemic for its services that spot and track coronavirus mutations. It said that about a fifth of the Sars-Cov-2 virus genomes were generated on one of its devices by scientists from more than 85 countries.
Scientists are also using its DNA sequencing technology across a range of research from human genetics and cancer research to crop efficiency and food security. Oxford Nanopore has created portable DNA/RNA sequencers that can fit in a pocket and can be used for population-scale human genomics.
In a statement, the company said: “Oxford Nanopore Technologies has today informed its shareholders that it has started the process of preparing for a potential initial public offering.”
The group, which is close to appointing banks to advise on the process, expects to float in the second half of 2021 “dependent on market conditions”.
It said that access “to deeper, international pools of capital would support our ambitious growth plans, enhancing our ability to innovate and scale our manufacturing and commercial functions”.
People close to the company said that it had considered floating elsewhere given the strength of the US biotech industry in particular, but that it was “rooted in the UK”.
Oxford Nanopore was founded in 2005 as a spinout from Oxford university, and last year opened a new manufacturing plant on Harwell science campus 20km south of the city. Gordon Sanghera, chief executive, said 2020 was “a pivotal year for us”, but added: “However, it is clear to us that we are still only in the foothills of what is possible.”