Healthcare-focused Athyrium Opportunities Fund II reached a final close of $1.2 billion for its mixed debt and equity investment vehicle. The fund is a joint-venture between New York-based asset managers Athyrium Capital Management and Neuberger Berman.
The successor vehicle will invest in commercial-stage healthcare firms across a variety of healthcare-related businesses, according to the statement. Neuberger Berman’s alternative business arm NB Alternatives is sub-advising the fund.
The fund, launched end of last year, has hit its hard-cap of $1.2 billion surpassing the initial target of $850 million. More than 40 institutions including private and public pension funds, endowments, and sovereign wealth funds, a number of whom are repeat investors from the previous fund have committed to the strategy, the firm announced.
The platform will make long term capital investments – both debt and equity – to sectors such as biopharma, medical devices, diagnostics, healthcare services and information technology. Instruments available to the investment managers include loans, notes, convertible securities, preferred stock and other equity, royalties and royalty-backed debt and structured instruments , according to the statement. Other forms of security, such as patents, could back collateralised lending, sources told PDI.
About 30 percent of the capital has already been deployed into companies including a vaccine biotech company, Apollo Endosurgery and drug-maker Cipher Pharmaceuticals. Investments will range between $25 million and $125 million across North America, Europe, Asia and Australia.
“We are looking to make about 20 investments over the period of next three-to-five years, and that could be by way of supporting organic growth in these companies or providing for acquisitions among other strategies,” Jeremy Lack, partner at Athyrium Capital told PDI. Lack did not give any numbers on the target net returns but maintained that “the risk-reward returns would remain positive”.
The first fund in the series, Athyrium Opportunities Fund raised about $507 million for its final close in May last year.
“Athyrium Capital has a strong track record of providing large, flexible and long-term capital solutions,” said Jeff Ferrell, founder of Athyrium Capital. “Our deep experience and expertise in the healthcare sector allows us to quickly assess opportunities and to be value-add partners with our portfolio companies.”
In 2009, NB Alternatives and Athyrium Capital formed a partnership to raise and deploy capital in structured investments in the healthcare sector.
Athyrium Capital Management was formed in 2008 and focuses on investment opportunities in the global healthcare sector and manages funds with committed capital totalling over $1.7 billion.
Neuberger Berman is a private investment manager with around $251 billion in client assets as of 30 June 2015.