Geneva-based IPF Partners is working towards a final close of €150 million for its maiden private debt fund in March 2015, Edouard Guillet, partner at the firm, told Private Debt Investor.
Having held a first close on €80 million in October 2013, the fund has attracted further hard commitments of around €25 million from new investors, Guillet said.
IPF I, which has a hard-cap of €200 million, provides growth debt to small and medium sized commercial-stage healthcare companies in Europe. It has committed €21.5 million in three investments so far and is planning to commit another €15 million by January 2015.
The fund invests Europe-wide with a focus on the UK, Germany, Benelux, France, Austria and Scandinavia. So far it has made two investments in the Nordics and one in the Benelux region.
All investments are senior secured amortising debt facilities with maturities ranging between three and seven years. Some investments may include a minority equity element of up to 15 percent of the overall investment but the fund is more focused on contracted returns, Guillet said.
IPF’s offering is appealing to borrowers which are seeking a low or non-dilutive investment and in that context a window of opportunity has opened up. “Equity market conditions have been challenging for many listed healthcare companies since the beginning of 2014. Both biotech and medtech shares have been under increased pressure… low to non-dilutive debt is emerging as an attractive financing solution especially in this period of increased volatility,” Raeto Guler, partner at IPF, explained.
All interest payments received from borrowers are passed on to investors, negating the need to recycle investments. “Investors like contracted, quarterly returns. Every quarter we distribute interest and amortisation payments back to investors, de-risking their investment exposure,” Guler added.
Analysis carried out by Guillet shows that around €250 million in potential healthcare debt transactions took place in Europe in 2014, up from €150 million in 2013. The figures include equity transactions by companies which were also understood to be considering debt financing.
As at first close, there were nine investors in the fund, mainly European institutional investors and a family office. The European Investment Fund, part of the European Investment Bank, has also committed.