Life-settlements firm expands into venture capital

SL Investment Management, a fund manager that builds investment vehicles around traded life insurance policies, has launched a venture fund to invest in early stage venture capital in the UK and Europe.

A fund manager that has been investing in UK traded endowments and US “life-settlement policies”, buying US life insurance policies, paying premiums and reaping a return when the insured person dies, has expanded its focus into the venture capital world.

SL Investment Management, an asset manager with about £832 million under management, has partnered with corporate advisor Deepbridge Capital to form a venture capital fund targeting $250 million that will focus on early stage life sciences, clean technology and specialist software investments in Europe and the UK, and also to a lesser extent in the US. It’s not clear if the fund has yet attracted any commitments since its launch in late September.

SL Investment Management has not traditionally operated in private equity or venture capital. The firm manages money for institutional investors and ultra-high net worth individuals on a global basis, building and managing funds based on traded life insurance policies and UK traded endowment policies.

The firm wants to capitalise on the opportunity in early stage venture capital, especially in the UK and Europe, where a dearth of financing has created the chance to provide capital and drive growth, according to Kieran O’Gorman, manager of corporates and institutions for SL Investment Management.

This was just too good of an opportunity to miss.

Kieran O'Gorman

The lack of financing for life sciences, clean technology and software comes from “an increase in the degree of risk aversion on the part of investors”, O’Gorman said, adding that investors have also been “distracted by opportunities in buyouts and the secondary market”. Investors have moved to the more mature levels of the venture market, where they can make safer bets, SL Investment Management said in fund documents seen by Private Equity International.

These opportunities “have eclipsed … venture capital and this seems to be far more pronounced in the UK and Europe,” O’Gorman said. “This was just too good of an opportunity to miss.”

The Deepbridge Innovation Fund is structured as a Luxembourg-domiciled “societe d’investissement a capital variable”, also known as a SICAV, which is an open-ended investment fund that can invest across asset classes.
SL Investment Management is the manager of the fund, while Deepbridge Capital is advisor to the fund. Deepbridge is a UK-based corporate advisory business formed last year.

The Deepbridge fund is targeting returns of more than 5x invested capital and charging management fees of between 2 percent and 2.5 percent, according to fund documents.

The fund has attracted some powerful individuals to sit on its executive committee. The chairman of the fund’s executive team is Chris Wood, an honorary professor at Imperial College in London who founded and exited two biotechnology companies, according to the fund’s web site.

Sir Richard Sykes, chairman of the Council of The Royal Institution of Great Britain and chairman of the UK Stem Cell Foundation, is the independent chairman of the committee.