Scientists receive pounds 5.25m in buy-out: University sells off 'ideas' company

FOUR academics have had a windfall of pounds 5.25m after City University, London, sold off a company that it set up to market their ideas.

The scientists, all of whom worked at the university in the Seventies, were the beneficiaries of a pounds 27m management buy-out of their company, City Technology, which manufactures environmental sensors.

The university has gained pounds 20m and the academics received the rest of the money after the costs of the buy- out had been deducted.

The deal, completed on Monday, is believed to be the biggest of its kind so far, but it is not the first, nor is it likely to be the last.

The higher education sector has become increasingly commercialised in recent years, with some universities boasting business and science parks on campus, and more academics are likely to benefit from such sell-offs as universities use their subsidiaries to raise capital.

The scientists, Tony Tantram, Bryan Hobbs, John Finbow and Robert Chan-Henry, said they have all received enough to pay off their mortgages, but not a great deal more. They will have to pay tax on the money and denied that they would be able to live a life of luxury.

Mr Finbow joined the team that bought out the company, and is to be its new chief executive. Dr Hobbs and Mr Chan-Henry are both still involved with the company and are likely to reinvest some of their earnings. Dr Tantram has retired.

'As an independent company we will be better placed to develop the business in the Nineties. The time is exactly right for us to seize this opportunity,' said Mr Finbow.

City Technology, now based in Portsmouth, was set up in 1976 to market a new design of oxygen sensor pioneered by Dr Hobbs and his colleagues, all of whom worked in the Wolfson Unit for Electrochemical Technology at the university. The company has won two Queen's Awards for technology and two for export achievement.

Both sides in the deal enlisted the help of financial advisers to help them to strike the deal, with Kleinwort Benson working for the university and 3i, the investment capital group, leading the management syndicate.

Jonathan Russell, local director of 3i Southampton, said: 'This is an exciting example of how an academic institution can develop a research programme into a superb company which can compete internationally.'