Healthcare specialist Athyrium hits $507m close

The fund, with an investor base of more than 35 institutions, will invest in a diversified pool of income-generating healthcare firms.

Athyrium Opportunities Fund, a healthcare credit-focused fund jointly-managed by Neuberger Berman and Athyrium Capital Management, has held a final close at $507 million, the firm confirmed in a statement.

The fund is co-managed by Athyrium Capital founder Jeffrey Farrell and Samuel Porat, a managing director at Neuberger Berman, who together formed a strategic relationship in 2009 in a bid to strengthen their ability to source and manage debt investments in the healthcare sector.

The fund’s strategy focuses on partnering with management teams of pharmaceutical, medical device and diagnostics companies with commercial-stage products and services who are looking for long term capital to grow their businesses, the fund managers said in a statement.

In addition to generating current income and capital gains for its investors, the fund was launched to provide significant flexibility for borrowers in the healthcare sector.

The fund, which was reportedly oversubscribed by investors seeks to make $25–$75 million financings in small- to medium-sized healthcare companies in the US, Europe and Asia.

Athyrium Opportunities Fund has already built a long pipeline of potential transactions, including: loans, notes, royalties or royalty-backed debt, preferred stock, convertible or other structured securities.

The fund has already made five investments to date representing over 20 percent of committed capital. These include investments in: MedPro Notes, BioFire Notes and Warrants, Linzess Notes, Verenium Notes and Warrants, SynCardia Notes and Warrants.

Further, the two firms have together competed more than a dozen transactions in providing direct loans, mezzanine, and senior loans to healthcare companies.

LPs in the fund include public and corporate pension funds, charitable endowments, insurance companies, funds-of-funds, family offices, and university endowments.

“If market conditions continue to present a compelling opportunity for both our investors as well as the companies we seek to finance,” Porat told Private Debt Investor.

Porat is optimistic that demand for exposure to debt streams into the healthcare sector will continue to surge. “Client response to the Athyrium Opportunities Fund has been high and we’re thankful for the trust our investors have placed in us,” he said.

The fund’s aim is “to create a diversified portfolio of investments that can generate relatively high current income while also offering a level of downside protection commensurate with fixed income investments,” he added.

The market may even see a new fund take off in as soon as the firm successfully deploys the existing fund, Porat concluded.