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The electrospinning company secures £1.5 million Series A funding led by Downing Ventures
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Downing
Downing launches new actively managed liquid alternatives fund aiming to deliver 7% to 10%+ per annum and positive returns in most markets. The new MGTS Downing Active Defined Return Assets Fund (‘Active Defined Returns’, the ‘Fund’), is the first fund from its new Liquid Alternatives team.
The Fund is aimed at institutional investors, Discretionary Fund Managers, IFAs and advised sophisticated individual investors, and will primarily consist of UK Government bonds and large-cap equity index options, which provide significant scalability and strong liquidity. It aims to deliver 7% to 10%+ per annum and positive returns in all markets except for a sustained equity market fall (generally more than 35%), over a period of at least six years.
The Fund is the first to be launched by the new Liquid Alternatives Team established by Downing. Collectively, the team has over 125 years of experience and sector knowledge, and includes Tony Stenning, who held senior roles at BlackRock and most recently was CEO of Atlantic House Group; Russell Catley, founder and also a former CEO of Atlantic House Group; Huw Price, a former Executive Director at Santander Asset Management, and Paul Adams, former Head of Cash Equities and Derivatives Sales, Royal Bank of Canada.
The Fund offers investors a compelling building block for multi-asset portfolios, aiming to add consistent and predictable returns, typically secured with a portfolio of UK Government bonds. The unique proposition includes a hybrid approach of using systematic derivative strategies and active management, combining liquid investments with predictable returns, and an equity like risk profile.
Investment strategy: Maximising the probability of delivering predictable defined returns across the economic cycle.
Systematic Liquid Derivatives: Systematic, derivative strategies optimise the equity risk-return profile. The Fund uses rules-based derivative strategies linked to the most liquid, large-cap global equity indices (i.e. FTSE100, S&P500) with the aim of harvesting well-proven consistent returns across a wide corridor of market conditions.
Strong security: The Fund will hold a high-quality portfolio of assets as secure collateral – typically UK Government bonds.
Active benefits: At times, rules-based, passive derivative strategies can underperform when markets move strongly – this is when specialist active management can add incremental gains by monitoring and monetising positions and applying active risk management.
Key benefits
Increased consistency and predictability of returns: Positive returns in all markets except for a sustained equity market fall of more than 35% over at least six years.
Diversification of risk: The Fund’s risk components are diversified across large, liquid equity indices, observation levels and counterparties. Secured with high-quality assets – typically UK Government bonds.
Active management: Our experienced team will actively manage the Fund and its investments to optimise risk and reward for investors.
Russell Catley, Head of Retail, Liquid Alternatives at Downing, said: “Put simply, we focus your investment risk on the probability of receiving the returns you need, not those you don’t. We target the highest probability of delivering 7% to 10%+ per annum with active management adding material incremental gains. We believe that we are building the next evolution of the proven success of Defined Returns funds
The Downing team isseeing strong demand from clients looking for alternatives to large-cap equity funds which are becoming concentrated in technology stocks, or alternatives to UK equity income funds and illiquid alternatives.”
Tony Stenning, Head of Liquid Alternatives at Downing, said: “The launch of our Active Defined Return Assets Fund is a significant milestone in the ambitious build-out of our new Liquid Alternatives strategies. It is a solution-focused fund that should deliver stable high single or low double-digit returns across a wide spectrum of equity market conditions, except for a persistent multi-year bear market. The Fund is designed to enhance balanced portfolios by providing consistent, predictable returns and is suitable for accumulation or drawdown.
“We aim to deliver a unique combination of proven systematic derivative strategies and specialist active management, and we are doing so at a very compelling fee level, below our closest competitors and in line with active ETFs.”
How the Fund is expected to perform in different markets
In bullish markets: UK Government bonds secure the capital, and the equity index options deliver a predictable 7-10%+ return per annum – giving up some less likely upside.
In neutral markets and normal market corrections: UK Government bonds secure the capital, and the index options deliver a predictable 7-10%+ return per annum.
In a sustained sell-off: if markets fall more than the cover to capital loss and do not recover for six years. Then capital is eroded 1:1 in line with the worst performing index.
The average Cover to Capital Loss is targeted at 35%: the average cover to capital loss represents the average level the Global indices within the Fund could fall before capital is at risk.
Fund key risks
Performance: Capital is at risk. Investors may not get back the full amount invested.
Liquidity: Access to capital is always subject to liquidity.
Counterparty risk: Other parties could default on the contractual obligations.
Fund Structure
UK regulated OEIC fund structure, fully UCITS compliant
Daily dealing, at published NAV
Minimum investment: £100,000
SRRI: 6 out of 7
Depositary: Bank of New York
Authorised corporate Director (‘ACD’): Margetts Fund Management Ltd.
I share-class: SEDOL: BM8J604 / ISIN: GB00BM8J6044
F share-class: SEDOL: BM8J615 / ISIN: GB00BM8J6150
Risk warning: Opinions expressed represent the views of the fund manager at the time of publication, are subject to change, and should not be interpreted as investment advice. Please refer to the latest full Prospectus and KIID before investing; your attention is drawn to the risk, fees and taxation factors contained therein. Please note that past performance is not a reliable indicator of future results. Capital is at risk. Investments and the income derived from them can fall as well as rise and investors may not get back the full amount invested. Investments in this fund should be held for the long term.
Important notice: This document is intended for professional investors and has been approved as a financial promotion in line with Section 21 of the FSMA by Downing LLP (“Downing”). This document is for information only and does not form part of a direct offer or invitation to purchase, subscribe for or dispose of securities and no reliance should be placed on it. Downing does not offer investment or tax advice or make recommendations regarding investments. Downing is a trading name of Downing LLP. Downing LLP is authorised and regulated by the Financial Conduct Authority (Firm Reference No. 545025). Registered in England and Wales (No. OC341575). Registered Office: 10 Lower Thames Street, London EC3R 6AF.
The Electrospinning Company, first established in 2010 as a spin-out from research undertaken by the UK Science and Technology Facilities Council (STFC), has received £1.5 million new funding led by London-based venture capital firm Downing Ventures, alongside VC firm MidVen, Newable Private Investing and the STFC.
The company uses technology called electrospinning to design, develop and manufacture biomaterials, known as ‘nanofibre scaffolds', which are made from synthetic polymers that are implanted into the human body; providing help for a range of medical patients and procedures, most typically in post-surgery recovery.
The 'scaffolds' are designed to mimic the body's natural extracellular matrix, which exists to provide support and signalling to surrounding cells, and the biomaterials are tailored so that they degrade or reabsorb naturally once the patient has healed.
Tendon surgery is just one example where the company's scaffold technology is being used in combination with traditional orthopaedic medical devices to improve the success rate of the medical procedure, by helping guide a patient's own cells into the wound healing site.
The Electrospinning Company supplied the first electrospun material to be used in a Food & Drug Administration (FDA)-approved medical device and has now been selling this product in the US for two years. The company is based in the growing Harwell Science and Innovation Campus, near Oxford, where the scaffolds are manufactured on site in a purpose-built facility.
Following earlier work with the University of Sheffield and the LVPrasad eye clinic in India, the company has also initiated a new project to develop a synthetic membrane that resembles amniotic membrane. Derived from human placenta, amniotic placenta is becoming increasingly popular as a bandage used for wound healing and eye surgery; a synthetic alternative would make this more affordable and available to far more patients.
Ann Kramer, Chief Executive Officer of the Electrospinning Company, commented: “We are excited about the prospects this new investment will bring for what we believe are highly flexible and extremely beneficial medical products. We are at an important growth inflection point for our business, as we enhance our technology platform and capacity. The funding will help us maintain the highest possible standards as we grow sales of existing product, increase our customer offer and develop new biomaterials.
“The deep insight of Will Brooks and the team at Downing Ventures, both in terms of their knowledge of the healthcare sector and their experience funding a wide variety of companies within it, gives us great confidence and we look forward to working with them.”
Will Brooks, Investment Director at Downing Ventures, added: “The Electrospinning Company is a brilliant example of the type of innovative technology and dedicated team that has the potential to deliver the return on investment we are looking for on behalf of our investors.
“Their established track record in the US really stood out to us and we plan to use our own experience of the US market to help them expand further, as well as in other markets that they have not yet pushed into.”
About The Electrospinning Company
The Electrospinning Company designs, develops and manufactures advanced biomaterials for use in implantable tissue-regenerative devices and sells a range of Mimetix® laboratory research products. The Company is located in a purpose-built facility on the Harwell Campus near Oxford with cleanrooms for R&D and manufacturing and is ISO 13485 medical device quality certified.
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