Schroders Capital Global Innovation Trust PLC shares jumped on Monday as it said its investee Araris Biotech AG is set to be bought for $400 million.
The London-based investment trust said Araris has entered an agreement to be bought by Taiho Pharmaceutical Co Ltd for $400 million upfront, with the potential for further milestone payments of up to $740 million.
Shares in Schroders Capital Global Innovation Trust were up 36% to 11.84 pence in London on Monday afternoon.
Araris is a Zurich-based biotechnology company developing next-generation antibody drug conjugates.
The investment trust said the deal values its holding at £19.5 million. This is a positive valuation revision of £16.7 million compared to its last carrying value of £2.8 million as of the end of September last year.
Schroders Capital Global said the impact of the deal on its net asset value will be evaluated at the end of March.
The upfront proceeds from the sale will increase the previously disclosed initial return of capital to £28.7 million from £10.0 million.
The initial return of capital will take place shortly after the receipt of initial proceeds from the transaction.
The trust said the upfront proceeds will generate a $24.3 million distribution at closing and potential further distributions of up to $43.6 million.
Schroders Capital invested in Araris as part of its seed round in 2019, before a further £2.6 million investment in October 2022.
Portfolio Managers Tim Creed and Harry Raikes said: ‘We chose to invest in Araris Biotech based on its compelling platform, with potential best-in-class antibody drug conjugates with superior design, high linker solubility and simple manufacturing that address the shortcomings of current generation ADCs.
‘Overall, the company fulfilled our four key investment criteria: a strong management team, a significant market opportunity, high quality science and reputable co-investors. We are delighted by the news of this sale which reflects the unique nature of the Araris platform.’
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