UBS wants to make an 'impact' with a new fund, shelling out $650M to join MPM
Swiss banking company UBS jumped into the deep end of biotech fundraising Wednesday, ponying up more than half a billion dollars toward new “impact” investments.
UBS contributed $650 million to MPM Capital’s second impact fund focused around oncology, the bank said Wednesday morning, making up the vast majority of MPM’s $850 million new fund. The bank claims that the total sum marks the biggest impact investment fund the biotech sector has ever seen.
CEO Ralph Hamers said in a statement the fund shows how UBS is “working with an expert partner to connect our clients with investable solutions that have the potential to improve the health and lives of many.”
Impact investing is a largely recent phenomenon, with the term having been coined in 2007, according to a Reuters report. Investors generally aim to tie philanthropic goals into the mainstream financial world, spending capital and investing in companies seeking to make an environmental or social impact.
It’s not entirely clear how investments in oncologic biotechs and drugs will fall under the same impact investing umbrella, given how corporate social responsibility typically plays into investor decisions. UBS’ argument seemingly centers around impacting the lives of patients, though the vast amount of life sciences funds and biopharmas also claim to do so.
For example, similar funds run by large financial institutions and hedge funds like to invest in nonprofits, whereas the MPM-run fund will set its sights on privately-held and publicly traded companies. MPM plans to allocate 80% of the fund to private biotechs while the remainder will be reserved for public ones.
The investors also appear to be technology and platform agnostic, noting in a press release that they plan on spending their cash on a variety of cell, gene and RNA-based therapies.
Regardless of the terminology, UBS will have a lot of money to throw around, and much more than its previous fund that closed in 2016. After raising $470 million five years ago, UBS and MPM are beginning to see big returns, and the pair highlighted ElevateBio as a top portfolio company. The biotech raised $525 million in a March Series C, putting its total war chest at $845 million.
And to tie the philanthropy together, UBS and MPM are promising to donate a share of revenues and “success fees” to the UBS Optimus Foundation and the American Association for Cancer Research, without affecting investor returns. Thus far, the pair has donated $8 million toward these causes from the first fund.