UK Life Insurance Giant Takes First Leap Into U.S. Market With $4B Life Sciences Fund

A U.K. financial giant is gearing up to make its first major investment in U.S. real estate, and it has chosen life sciences as its target sector.

Legal & General Capital, the alternative asset platform of Legal & General Group, has launched a joint venture with developer Ancora to acquire and develop $4B worth of life sciences real estate in the U.S. over the next five years, the companies announced on Wednesday. LGC is providing a $500M infusion of seed capital to get the venture off the ground.

LGC and Ancora will each own 50% of the venture, which will operate under the company name Ancora L&G and be led by Ancora's founder, president and CEO, Josh Parker. Ancora L&G will be based out of Durham, North Carolina, just like Ancora, but the JV already has dedicated staff of its own in Durham as well as satellite offices in New York, Boston, Chicago, Indianapolis, Baltimore and Washington, D.C., Parker told Bisnow in an interview.

Despite the placement of its offices, Ancora L&G will focus on emerging markets "where early mover advantages are available," with New Haven, Connecticut; Portland, Oregon; Denver and Salt Lake City as early targets, the announcement states. Ancora will favor proximity to and partnerships with academic institutions, and will likely lean toward owning space for accelerators, incubators, startups and earlier-stage companies.

“If you look outside the top five life sciences markets, the ability to meet the needs of early stage growth companies requires a level of data analysis that we have and an understanding of risk assessment that L&G, as one of the largest asset managers in the world, has,” Parker said.

L&G has made individual investments in U.S. property and infrastructure on behalf of other clients, but it has never made an investment of this type and scale on this side of the Atlantic. Though Ancora will be the lead developer on projects the JV undertakes, it will be looking to supplement LGC's capital with institutional and direct foreign investment at either the portfolio level or for individual properties, Parker said.

Short-term venture capital investment in life sciences startups is drying up so far this year. But Ancora is betting the long-term strategy L&G favors due to its focuses on life insurance and annuities will combine with similar timelines from federally funded programs and academic institutions to weather what promises to be a bumpy year or more in the capital markets, Parker said.

The impending launch of the federal Advanced Research Projects Agency for Health offers assurance that the public and academic sectors can shore up support for early stage research if VC investment turns to more established, commercialization-focused companies.

“We’re starting to see increased funding through traditional channels, and ARPA-H has the potential to be an accelerant for all of that activity,” Parker said. “The new investment from the U.S. government is still in the early innings, and since added emphasis has been placed on STEM in K-12 education, that [student] cohort has not entered the workforce yet, so their entrepreneurial spirit has yet to hit the marketplace.”