Novo Holdings posts income and investment returns of DKK 26 billion (EUR 3.5 billion) with a good performance from the Novo Group companies and the Investment Portfolio
This result is based on a good performance from the Novo Group companies (Novo Nordisk and Novozymes), as well as the Investment Portfolio. The result strengthens Novo Holdings’ position as a leading international life science investor.
The largest contribution to the 2019 result of DKK 26 billion (EUR 3.5 billion) came from the returns from the Investment Portfolio of DKK 14.8 billion (EUR 2.0 billion) versus DKK 0.9 billion (EUR 0.1 billion) in 2018. Dividends and income from participating in the share repurchase programmes of the Novo Group companies totalled DKK 11.3 billion (EUR 1.5 billion) versus DKK 10.6 billion (EUR 1.4 billion) in 2018.
“2019 was a very satisfactory year for Novo Holdings. The 2019 income and investment return of DKK 26 billion is well balanced with strong contributions from the Novo Group companies and from the Investment Portfolio. We are pleased that all the investment teams contributed to our 2019 returns. We strengthened our position as a leading international life science investor with the establishment of our Growth Equity team and our broader geographic focus. Our Financial Investments team posted a strong performance, and, in particular from the Direct Investments portfolio and the Real Assets portfolios,” says Kasim Kutay, CEO of Novo Holdings.
Novo Holdings’ total investment assets grew by 24% to DKK 411 billion (EUR 55 billion) at the end of 2019, when valuing both A and B shares of the Novo Group companies at the share prices of the B shares on 31 December 2019.
In 2019, Novo Holdings increased its investments in the life science sector, making 33 new investments totalling DKK 5.9 billion (EUR 0.8 billion). Novo Growth, which was established in 2019 as a new, independent investment area, invested in 6 companies. In addition, Novo Seeds and Novo Ventures were very active, with Novo Seeds investing in 5 new companies and Novo Ventures investing in 19 new companies. The biggest single investment was made by the Principal Investments team, which joined a consortium to acquire USA-based WCG, which provides solutions for clinical research (the transaction closed in early 2020).
At the end of 2019, the portfolio of more than 100 life science investments outside the Novo Group had a value of DKK 65 billion (EUR 8.7 billion). The return on these investments in 2019 was 11%, amounting to DKK 6.4 billion (EUR 0.7 billion). This primarily resulted from a positive trend in the share price of several listed companies and a higher estimated value of several unlisted companies in the portfolio.
Novo Holdings has an average annual 5-year return of 13% and 10-year return of 17% on Life Science Investments. Life Science Investments accounted for 51% of the Novo Holdings total investment portfolio at the end of 2019.
Novo Holdings diversifies its investment portfolio by investing in assets outside the life sciences. The assets comprise a broad global portfolio of primarily liquid equity and fixed-income securities. At the end of 2019, these Financial Investments had a value of DKK 62 billion (EUR 8.3 billion) and accounted for 49% of the total investment portfolio. The return for 2019 was 17% and totalled DKK 8.4 billion (EUR 1.1 billion) versus negative DKK 1.3 billion (EUR –0.2 billion) in 2018.
OVERALL INCOME, RETURN AND ASSETS
Return on the investment portfolio
The following table shows the 5- and 10-year returns for Novo Holdings’ life science investments, financial investments and total investment portfolio. The results for 2019 and 2018 are included for comparison along with the long-term returns.
|Annual return on the investment portfolio,
excluding the Novo Group
|2019||2018||Last 5 years||Last 10 years|
|Return on life science investments (%)||11%||4%||13%||17%|
|Return on financial investments (%)||17%||-4%||8%||10%|
|Return on total investment portfolio (%)||14%||1%||11%||+13%|
Income and investment returns (in DKK (EUR) billion)
|Income from the Novo Group||11.3 (1.5)||10.6 (1.4)|
|Return on life science investments||6.4 (0.9)||2.2 (0.3)|
|Return on financial investments||8.4 (1.1)||-1.3 (-0.2)|
|Total income and investment returns||26.0 (3.5)||11.4 (1.5)|
As a holding and investment company, Novo Holdings invests to generate long-term returns. The overall value of the holding and investment assets was DKK 411 billion (EUR 55.0 billion) at the end of 2019.
Holding and investment assets (in DKK (EUR) billion)
|Novo Group||284 (38.1)||227 (30.4)|
|Life science investments||65 (8.7)||58 (7.8)|
|Financial investments||62 (8.3)||46 (6.1)|
|Total value of holding and investment assets||411 (55.0)||331 (44.3)|
Notes: Income from the Novo Group includes dividends received from Novo Nordisk A/S and Novozymes A/S, in addition to income related to the sale of shares in Novo Group companies. In the investment assets overview, the value of the Novo Group is presented with both A and B shares valued at the closing price of B shares on 31 December 2019 and 31 December 2018. Income and investment returns as well as total holding and investment assets include the Novo Nordisk Foundation’s share of returns and assets.
About the performance overview of the investment portfolio
All returns and indices are calculated in DKK and reflect total returns excluding internal costs. The returns on life science investments are calculated as internal rate of return (IRR) based on the book value at the end of the measurement period and cash flows within the measurement period compared with the book value at the beginning of the measurement period.
The returns on Novo Holdings’ life science investments are benchmarked by applying the public market equivalent (PME) method. The returns on the liquid component of financial investments are calculated as the time-weighted rate of return (TWR).
Read the annual report here.
About Novo Holdings
Novo Holdings is a Danish private limited liability company wholly owned by the Novo Nordisk Foundation. It is the holding company of the Novo Group, comprising Novo Nordisk A/S and Novozymes A/S, and manages the Foundation’s assets.
In addition to being the major shareholder in the Novo Group companies, Novo Holdings provides seed and venture capital to development-stage companies, takes significant ownership positions in well-established companies within life science and manages a broad portfolio of financial assets.
It is the vision of Novo Holdings to be recognized as a world-leading life-science investor with a focus on creating long-term value.
Read more at www.novoholdings.dk
About the Novo Nordisk Foundation
The Novo Nordisk Foundation is an independent Danish foundation with corporate interests. The Foundation has two objectives: 1) to provide a stable basis for the commercial and research activities of the companies in the Novo Group; and 2) to support scientific, humanitarian and social causes.
The vision of the Foundation is to contribute significantly to research and development that improves the lives of people and the sustainability of society. Read more at www.novonordiskfonden.dk/en/
Christian Mostrup Scheel, Senior Press Officer, phone: +45 3067 4805, email: [email protected]