Rebecca Evans MS, Cabinet Secretary for Economy, Energy and Planning
A statement on the Wales Life Sciences Investment Fund was made in July 2023 following liquidation of the fund in February 2023. This statement addresses the final write-off of losses arising from the fund.
The Wales Life Sciences Investment Fund was set up in 2012 on advice from the Life Science Sector Panel. The fund was managed by specialist fund manager Arix Capital Management, procured by the Welsh Government, with the Development Bank of Wales acting as Fund Holder. A loan of £42.4m was made from the Welsh Government to the Development Bank of Wales for the investments made through the fund by Arix Capital Management.
Early stage equity investment in life sciences companies is inherently high risk. While the fund supported multiple positive outcomes and met key objectives, financially it made a loss.
The board of the Development Bank of Wales realised previous accounting impairments to write-off £27.1m in its 2022-23 accounts and notified this to the Welsh Government. Anticipating a significant loss of value, a cumulative provision for a loss of £18.9m was reflected in 2023-24 Welsh Government accounts.
The fund was liquidated in February 2023. At that time the remaining assets, shares in 4 companies, were transferred from Arix Capital Management to the Development Bank of Wales. At that time the estimated value of the transferred assets was £2.5m.
The Development Bank of Wales has sought appropriate opportunities to exit from these investments and values have continued to be impacted by the market. An exit from the transferred investments contributed to a repayment of £1.82m to the Welsh Government. On top of a £20m repayment, which took place in 2021-22 following a successful exist from the Simbec Orion investment, total repayments have been £21.82m – approximately half the value of the original loan.
There is now little prospect of further returns from the remaining assets. A decision has therefore been taken to complete the write-off process and to reflect this in the accounts of the Welsh Government for 2024-25. This is primarily an accounting matter with the budgetary consequences of the loss being addressed in prior years through the consolidation of the Development Bank of Wales accounts into the accounts of the Welsh Government.
The Public Accounts and Public Administration Committee formally considered the Fund and its performance on 27th September 2023. Following correspondence between the Committee and both Welsh Government and the bank, a final response addressing follow-up questions on the fund was submitted in March 2025. The Development Bank’s final fund closure summary was also submitted to the Committee in March 2025.