U.K. Lawmakers Fret Over China Investment in University Spinoffs
(Bloomberg) -- Chinese investors are increasingly backing the businesses emerging from U.K. universities even as lawmakers urge government to rethink its open-door approach to foreign takeovers.
In the past decade, 79 of 1,547 U.K. university spinoffs have been sold to overseas companies, according to data firm Beauhurst, which tracks the transactions. It said three had their central assets acquired by China-headquartered firms, while 55 have Chinese citizens as directors and 15 as shareholders.
“I hope the government is keeping a close eye on who is buying up the companies that could be the basis for our future prosperity,” said Damian Green, a former Cabinet minister, in an interview.
Green, who was effectively deputy to former Prime Minister Theresa May, said converting world-class university research into commercial opportunities “is vitally important for our economic future and we need to ensure that companies like this are not being picked off by a country that may not have our best interests at heart.”
The U.K. has long encouraged foreign investment, and as recently as this month Prime Minister Boris Johnson said he doesn’t want to drive out Chinese investment. Being acquired by a bigger company can often be the best way for startups to become commercially viable, said Beauhurst’s head of research Henry Whorwood.
However, some in Johnson’s own Conservative Party want him to take a stronger line. The U.K. is currently examining the sale of Newport Wafer Fab, a small Cardiff University-linked firm, to Nexperia, a semiconductor business owned by China-headquartered Wingtech Technology Co Ltd.
Some lawmakers have said that deal should trigger recently-strengthened takeover rules concerning national security. It also prompted the U.K.’s foreign affairs committee to call for ministers to review their overseas investment strategy.
“Acquisitions by foreign entities can serve as the first step toward moving strategically vital companies, assets and intellectual property abroad,” a report from the committee published Wednesday concluded. It recommended that officials should monitor technological developments at universities as well as businesses because “this transfer of assets threatens to make us reliant on others.”
Beauhurst’s information was compiled from public announcements and filings on Britain’s business registry Companies House, so may not be comprehensive. But it said chemical analysis firm Imspex was bought by Jinan Hanon Instruments Co Ltd. in 2016, location-positioning startup Sensewhere’s intellectual property by Huawei Technologies Co. last year, and gene therapy company Oxgene by WuXi AppTec Co Ltd. in March.
Representatives for Imspex, Jinan Hanon, Oxgene and WuXi didn’t immediately respond to requests for comment. Sensewhere was not available to respond to a request for comment, and Huawei declined to comment.
“Spinouts are a mixed bag, and with a population just over 1,500 out of a total business population closer to 5 million, they are a minority,” said Beauhurst’s Whorwood. “But in terms of the value and potential impact of the intellectual property and research they are trying to commercialize, they punch well above their weight.”
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