The University of Cape Town (UCT) has shown its commitment to innovation and ensuring its research outputs have an impact with Council approving the allocation of a portion of the institution’s investment portfolio to a private equity fund, offering financial support to UCT’s various spin-off companies.
The Evergreen Fund, which had accumulated R4.3 million from alumni donations, was operationalised following Council’s approval. It saw an injection of around R60 million in 2017 and had facilitated investments to the tune of R34.2 million by the end of the following year. A further R9 million has been allocated to the fund this year.
The spin-off companies in which investments were made included Straight Access Technologies (SAT) Holdings (Pty) Ltd, CapeRay Medical (Pty) Ltd, Cape Bio Pharms (Pty) Ltd and Nisonic AS.
In all cases the financial commitment by the fund has been significantly leveraged by other investment in the spin-offs, namely from Bidvest to SAT, the Industrial Development Corporation (IDC) to CapeRay, and the Department of Trade and Industries Technology and Human Resources for Industry Programme (dti THRIP) to Cape Bio Pharms. Nisonic, which is incorporated in Norway, has secured investments from several venture capital funds there, as well as grant funding from the Norwegian government.
The purpose of the Evergreen Fund is to assist innovators to successfully transform good technology into good business in a scenario where there is a dearth of early-stage funding for “deep” technology companies creating products in the non-ICT space. The spin-off companies are developing entrepreneurial skills and creating local jobs, especially for highly-skilled postgraduates.
Private equity fund
The idea of creating a private equity fund was born out of a desire to make an equity investment in Access Technologies. This was initiated by former UCT finance executive Peter Grant, who was also a director of SAT, prior to his retirement.
In 2016 Ashley Francis, executive director: finance, continued championing the idea of creating a self-sustaining fund to support spin-off companies.
“It was evident that without a cash injection in strategic spin-off companies, they would find it very difficult to get to commercialisation,” Francis explained.
UCT manages a substantial investment portfolio via the Joint Investment Committee (UCT and UCT Foundation funds), utilising a mechanism of strategic asset allocation. To this point, the committee had not considered investment into private equity, instead focusing on equities, cash and bonds.
“This, then, presented an opportunity to convince Council and the UCT Foundation Trust to allocate a portion of the investment portfolio to private equity, with the UCT portion earmarked specifically for UCT spin-off companies.”
“This, then, presented an opportunity to convince Council and the UCT Foundation Trust to allocate a portion of the investment portfolio to private equity, with the UCT portion earmarked specifically for UCT spin-off companies,” Francis said.
The terms of the Evergreen Investment Fund’s governance model dictate that investment decisions lie with the university’s Intellectual Property Advisory Committee (IPAC), as delegated by UCT’s Council.
IPAC has invited professionals with aligned backgrounds to constitute an advisory committee, the Private Equity Advisory Group (PAG), which has its own terms of reference and provides independent strategic investment advice to IPAC. The PAG committee members’ range of experience covers the financial, legal and socio-economic investment sectors, and Francis said UCT appreciates their significant contributions, which they provide voluntarily.
Along with Francis, the PAG members are Chris Derksen (chair), Gasant Orrie, Guy Harris and AJ Nel.
The Evergreen Fund is administered by the Research Contracts & Innovation Department (RC&I), which acknowledges the significant support received from the Department of Science and Technology’s (DST) National Intellectual Property Management Office (NIPMO) for IP awareness-raising, among other things.