Lockton’s Justin Warents speaks with Andrew Pinto, former Finance Director at Ironstone Asset Management, about taking Life Science REIT public in November 2021 as well as what lies ahead for the life science sector.
Justin: Firstly, congratulations on the first and incredibly successful listing of Life Science REIT plc! Can you tell us more about your involvement in the IPO and what made you want to get involved?
Andrew: I was offered the job because I have undertaken major capital-market transactions before and also have a life science degree in microbiology, so always maintained an interest in biotechnology.
I can imagine it must have been a stressful yet exciting time for everyone involved. What do you think the secret was to raising £350m and being the largest London listed UK REIT IPO since 2016?
Follow trends from America and get in quick! There was no secret formula. There has been a huge increase in investment into the sector due to the growing global population, who all need food and medications for old and new diseases.
Is there anything you would have done differently?
Not really, we had wonderful advice from Panmure Gordon, Jefferies and Gowlings.
Was this your first IPO, or have you been involved in others?
I was involved in the IPO of McBride plc in the 90s. I was just a newly qualified accountant back then. We had a small head office, so the work was shared out and I had great exposure to the transaction. I was also heavily involved in the reverse takeover of Terrace Hill Group plc by Urban & Civic. I have listed a lot of Eurobonds and issued US private placement debt before, which is a very similar process.
After such a successful listing, what did you do to unwind after the REIT went public in November?
I don’t think I have unwound yet! It was immense hours, 7 days a week and I only had half a day off for my mother’s cremation and a day to drive my daughter to uni.
In your opinion, do you think we would have seen the same level of investment had the Covid-19 pandemic not happened?
Yes, Covid-19 has just focussed eyes on the sector, but the fundamentals were there.
What do you think has caused the surge in demand for life science real estate?
More people in the world and an ageing population globally. Then there’s the use of life science to find treatments for established diseases and illnesses. Lastly, the zoonotic disease threat. Put all of those together and you’ve got a perfect opportunity for growth in the sector. The sector needs space. We are lucky in the UK to have four of the world’s top scientific universities, so we are over-endowed with brainpower.
Where do you see the future of life science investment going and where do you think the hot locations are outside of the Golden Triangle?
There’s more to life than the triangle, examples are the Midlands, like Warwick, where I went to university, the North and of course, Scotland and Ireland.
What challenges do you think the sector could face in the next decade?
There could be a levelling up in the supply and demand imbalance, so it is important to build well in the right places and have a good offering, i.e. curate the environment.
What are the advantages and disadvantages of a Life Science REIT?
The advantages are that it gives the normal person in the street the chance to participate in investing, as it was a retail offer as well as institutional. Also, the ability to go back and have rights issues quickly and easily. The disadvantage is the cost of the IPO, typically 2% of funds raised.
We both started our careers in finance, I decided to go down the insurance route, what’s next for you? Another IPO?
Most probably, I think that’s quite likely, given my experience. I’m open to conversations with people. We went from start-up to IPO in 5 months, with just 2 of us to start with, so I like to think I know a bit about the process now!
The Covid-19 pandemic has meant most of us have spent time getting to know our home turf. If you could travel to anywhere in the world, where would it be and why?
I’d like to get to my house in France, which I haven’t seen for 2 years, other than on Google maps!
What is the most valuable piece of advice you have received and carried throughout your career?
Be positive, be cheerful, be kind to everyone, work hard, help others and honour your promises. Also get a good solicitor (because some people don’t honour their promises). Lastly, don’t eat yellow snow!
Brilliant. Thank you for your time. One last question: can you tell us something most people don’t know about you?
I love to cook. The kitchen is the closest thing I have to a lab in my house!
I have a question for you, Justin. What are the risk and insurance challenges associated with life science real estate?
Research and development, manufacturing, warehousing, and office space can all be found in a life science asset, all of which present different risks for insurers to consider. This diverse risk pool means that insurers are essentially providing capacity for a multi-risk asset class. Information gathering is key and underwriters are likely to require a significant amount of data with regard to tenant processes and risk management protocols in place on site.
Use of heavy machinery as well as the potential for explosive chemicals to be stored and tested in the labs will be key considerations for insurers, as well as how the building is constructed and whether there are any combustible materials used.
Understanding the processes is key when placing insurance for potentially high risk exposures, and so we recommend that active engagement with insurers is vital to help us negotiate the best outcome.
For further information on placing insurance for life science assets, please get in contact Justin Warents.