Perceptive reaches $675m hard-cap for healthcare-focused fund

The firm has done deals with healthcare therapeutics companies, as well as medical device and diagnostic businesses.

Perceptive Advisors has hit the hard-cap for its second fund, putting the firm’s total private credit assets under management at about $1 billion, the firm said Monday.

The New York-based healthcare lender raised $675 million for its Perceptive Credit Opportunities Fund II, which included capital allocations from foundations, endowments, family offices, pension funds and other financial institutions, according to a statement. Fund I closed in October 2016, raising $323 million and surpassing its $300 million target.

The LPs for the firm’s second credit fund, which were located in both the US and Europe, were “cognisant that the generalist lending space was saturated with significant competition”, director of investor relations Patrick Morrow said.

Other healthcare lenders have also raised significant sums of capital, with CRG closing on its hard-cap of $1.25 billion for CRG Partners III in January 2017. It has since returned to market with its fourth fund.

Athyrium Capital Management, part of the Neuberger Berman Group, closed its Athyrium Opportunities Fund III at $2.03 billion in December 2017. In addition, Deerfield Management raised more than $2.39 billion for its fourth flagship fund, Deerfield Private Design Fund IV, according to a November 2016 regulatory filing.

“The specialised nature of healthcare lending can shield the firm’s transactions from the looser documentation and tighter spreads that generalist lenders have faced recently,” Perceptive portfolio manager Sam Chawla said. “All-in interest rates are generally in the low double digits.”

A first-quarter 2018 white paper by Marathon Asset Management estimated that life sciences debt, royalty-backed credit and royalty opportunities account for $25 billion of dealflow annually. It also estimated that life science private loans can be priced above direct lending first-lien loans by 4 percent or more.

Returns for the sector can often show a gross unlevered internal rate of return of 10-15 percent and a cash-on-cash multiple of 1.5x or more over an average five-year hold period, according to the Marathon paper.

Chawla noted that Perceptive targets an array of healthcare companies. Since its inception, healthcare therapeutics companies have made up 30-40 percent of the firm’s deals, as have transactions with medical device and diagnostics businesses. The remaining deals have been with research tools firms or companies that don’t fit squarely in one of the other sub-industry categories.