Wellcome Trust, a UK medical charity, has made the unusual move of funding more than half of a $52 million (€38 million), seventh-round financing of US optical networking and services company Xtera Communications.
The $26.8 billion UK charity invested with returning investors New Enterprise Associates and ARCH Venture Partners, both of which are US venture firms focused on life sciences and technology.
“We rarely invest directly into companies, choosing instead to focus on investing as a limited partner in venture capital and private equity funds,” Geoff Love, head of venture capital investments for the Wellcome Trust, said in a statement. “However, Xtera is a compelling investment opportunity combining excellent management, proven financial results, strong IP in a growth market, and multiple opportunities for strategic growth. We subsequently made the decision to invest directly into the company.”
The trust recently bid alongside Terra Firma, a UK buyout firm, and HBoS, a UK bank, in a failed £12 billion public-to-private of Boots, the UK pharmaceutical retailer, which Kohlberg Kravis Roberts eventually succeeded in delisting.
Wellcome Trust is one of the world’s richest medical charities, second only to Bill and Melinda Gates Foundation. Its chief investment officer, Danny Truell, is a keen advocate of leveraged buyouts and a rare defendant of its practices from the investor community.
He recently spoke out against any UK tax changes pertaining to private equity, arguing that it could harm the Trust’s returns, resulting in less medical research, as well as force it to withdraw UK investments.