HBM BioVentures' objective is to generate long-term capital gains with investments in emerging private and public companies in the biotechnology, human medicine, diagnostics and medical technology sectors and related areas.
2. Investment strategy
Within its target sector, HBM BioVentures invests predominantly in later-stage emerging private companies which are attractively valued and have a convincing business model, including their product pipeline, technology and management:
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> | The initial investment is typically made in the later stages of clinical development, and where emerging and profitable or cash flow-neutral companies require financing for their expansion. There must be an attractive ratio between value-creation potential and the risk of the investment. HBM BioVentures must also be able to influence the portfolio company, particularly with regard to its exit from the investment. |
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HBM BioVentures may acquire majority participations in portfolio companies and thus include these portfolio companies as subsidiaries in its consolidated financial statements. | |
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The amount of the investment may be increased in follow-on financing rounds provided the value-creation potential remains intact. | |
| > | HBM BioVentures has the flexibility to increase its investment further at the time of or after the portfolio company's IPO. |
Geographical focus
Investments are made worldwide – primarily in Europe and Asia, and to a lesser extent in North America.
Availability of funds
HBM BioVentures maintains adequate short-term funds to ensure that it is able to satisfy all of its commitments, including follow-on financings for portfolio companies. Cash and cash equivalents are held with a variety of top-rated banks.
Debt financing
With the approval of the Board of Directors, HBM BioVentures Ltd may obtain debt financing totalling no more than 20 percent of net assets at any time. Where possible, the repayment dates for this borrowed capital will be staggered over time.
Hedging
HBM BioVentures may hedge all or part of its investment risks using derivatives or other appropriate financial instruments. Such transactions must be aimed at reducing overall portfolio risk.
Investment instruments
HBM BioVentures' investments are made primarily in equities. HBM BioVentures may also invest in other instruments including, but not limited to, convertible bonds and, exceptionally, debt securities and derivatives.
3. Investment categories
HBM BioVentures continually optimises the composition of its portfolio in line with its sector focus and prevailing market circumstances. HBM BioVentures holds a diversified portfolio of high-quality emerging companies with considerable potential. Without the consent of the Board of Directors of HBM BioVentures Ltd, the acquisition cost of any single investment may not exceed ten percent of net assets.
Private companies
The majority of capital flows into direct participations in private companies with a convincing business model. These are generally operating at break-even and are unlikely to require any further financing. HBM BioVentures may acquire majority holdings in portfolio companies, and guides and supports them.
Public companies
HBM BioVentures may increase its investment in a portfolio company at the time of or after the latter's IPO. HBM BioVentures may also make investments in emerging public companies where it is able to exert influence over those companies. Increases in the value of existing holdings – following private portfolio company IPOs, for example – may result in a significant proportion of net assets being held in public companies.
Financial instruments
A total of up to three percent of the net assets of HBM BioVentures may be invested in long or short holdings in options in individual public companies. Short options holdings are limited to a cumulated total of ten percent of HBM BioVentures' net assets. Holdings in sold call options which are covered by the corresponding portfolio holdings may be entered into additionally.
4. Investment decisions
Investment and divestment decisions in relation to individual companies are taken by the Board of Directors of the investing HBM BioVentures entity, HBM BioVentures (Cayman) Ltd., based on the recommendations of the investment manager, HBM Partners (Cayman) Ltd. The investment manager engages one or more investment advisors. Within the scope of HBM BioVentures' ordinary business activities, the Board of Directors of HBM BioVentures Ltd does not make any company-specific investment or divestment decisions.
5. Application of and changes to Investment Guidelines
The original Investment Guidelines were adopted by the Board of Directors of HBM BioVentures Ltd on 6 December 2001, revised on 14 May 2004 and 7 July 2006, and passed in their present form on 25 June 2010. These Investment Guidelines define and regulate the investment activities of HBM BioVentures Ltd and its subsidiaries ("HBM BioVentures"). The Investment Guidelines may be amended within the limits of the Articles of Association of HBM BioVentures Ltd by its Board of Directors at any time.
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