It is very important that we are not selling out intellectual property rights

Professor Graham Richards

The success of the university's existing spin-outs means the group will almost certainly get its money back and more, a university spokeswoman said.

"It is a risk, as all investments in future ventures are, but our chemistry department has got a good track record in producing spin-out companies," she said.

Equity in spin-outs at Oxford is split between researchers, investors, management and the university on a deal-by-deal basis.

The university pockets between 5% and 30%.

The Beeson Gregory agreement will see the company take 50% of the university's share of chemistry research spin-outs over the next 15 years, leaving the other parties' equity untouched.

Professor Graham Richards, chairman of the chemistry department, said the university would enjoy "significant upside" from the deal.

'Brilliant scheme'

"This is quite a brilliant scheme and satisfies all our needs. It is very important that we are not selling our intellectual property rights."

Chief executive of the Beeson Gregory Group, Andrew Beeson said the company was "delighted" to work with Oxford University.

"We are looking forward to our team making a significant contribution to the ultimate value of the chemistry department's research and to playing a role in helping keep the department in its pre-eminent position worldwide," he said.

Work has already started on the new �60m department, which is expected to be completed by 2003.

The aim is to bring together the three branches of the science - organic, inorganic and physical - under one roof for the purposes of teaching and research.

Isis innovation

Spin-out companies are managed by the university's subsidiary company, Isis Innovation, which turns out on average two companies a month.

The current value of the university's listed companies is estimated to be �1.8bn.

Isis Innovation - set up in 1988 - currently has about �19m worth of funding from investors offering cash for ideas that interest them, the university spokeswoman confirmed.