Oxford Nanopore to use ‘anti-takeover’ shares to remain British champion

Oxford Nanopore, one of Britain’s most highly valued tech start-ups, will use an “anti-takeover” structure in its upcoming IPO so it can fend off foreign bidders and become a national champion.

The company, which was spun out of Oxford university in 2005, has had a breakthrough year after its DNA sequencing technology became essential in tracking the spread of Covid-19 variants around the world. Its devices have been used in 85 countries, and about 18 per cent of all coronavirus genomes globally have been run on them.

In March it said it would list on the London market in the second half of this year, with analysts expecting it to reach a valuation of between £4bn and £7bn. Since then, it has raised a further £195m from investors including Singapore’s Temasek.

This week, the company filed for shareholder approval to give its chief executive, Gordon Sanghera, “limited anti-takeover shares” so that he can veto a hostile takeover. These shares expire after three years, and do not confer any other voting rights.

Sanghera said he was determined to avoid the fate of other high-flying British life sciences companies which had been bought by foreign rivals.

Discussing British innovation, Sanghera told the FT: “Medisense was an Oxford spinout that was sold to Abbott in 1996 for $876m and Solexa was sold to Illumina ten years later for $600m. The Solexa deal enabled Illumina, now worth $70bn, to become the world’s dominant sequencing company.

“Myself and our CTO Clive Brown [a former Solexa employee] don’t see these as great successes. We saw this as a sad ending of what could be a globally dominant tech, and no revenues really have come back to this country,” said Sanghera.

Sanghera said Oxford Nanopore chose to list in London because it sees itself as a British success story.

“What we set out to do at the outset is to build a global tech company that goes all the way from academic inception through to early commercialisation, which this country has a great track record of, but then usually companies like that get acquired,” he said.

“For us the next five years is to prove out the ability of UK tech companies to really go on and get to the next phase and become commercially dominant . . . to show strong commercial growth globally. And really take the company beyond the phase of getting acquired.”

The company hired Bank of America, JPMorgan and Citi to advise on the process.

Other UK listed companies, including The Hut Group and Deliveroo, have also tried to retain greater control for founders with dual-class share structures in recent months. Such structures have been common in Silicon Valley, but Deliveroo’s IPO was attacked by UK fund managers because of the control that its founder, Will Shu, retained.

Sanghera said: “A confluence of the pandemic which means people understand better what we do, and the government wanting to back tech companies [means] London has become far more attractive than a year ago. We think it . . . just takes a handful of companies to change that paradigm.”