Private-equity firm DW Healthcare Partners on Monday closed a US$610-million fund, its fifth.
All told, the 17-year-old firm has raised $1.3-billion in its history for investments in mid-size health-care companies in Canada and the U.S. Canadian founder Andrew Carragher started the company in Park City, Utah, but opened a Toronto office in 2013. Today, he and two-thirds of the two-dozen employees work from its Canadian offices.
The result is a small number of Canadian investments – three to date out of more than 30 – and several Canadian investors in the fund that closed Monday. Mr. Carragher declined to disclose the investors by name, but said the Canadian participants include “insurance companies, some banks, two high-net-worth families and a Canadian pension plan.”
DW Healthcare Partners Fund V is more than twice the size of each of its two predecessors, III and IV, which raised US$265-million and US$295-million, respectively. DW Healthcare Partners likes to make investments of US$20-million to US$60-million in companies with EBITDA (earnings before interest, taxes, depreciation and amortization) of US$5-million to US$15-million.
The scope of the new fund will allow DW Healthcare Partners to bump up the size of the stake in its investments to 75 per cent to 80 per cent from roughly 60-per-cent ownership in the past, Mr. Carragher said. (Typically, the rest is owned by a founder.) And DW Healthcare Partners Fund V may be able to work in 10 to 11 investments, versus roughly eight for past funds.
Canadian investments have included Markham, Ont.-based Canadian Addiction Treatment Centers and Dorval, Que.-based Isologic Innovative Radiopharmaceuticals Ltd., a nuclear medicine company. DW Healthcare Partners bought into both companies in 2014 and sold the stakes in 2018, he said.
DW Healthcare Partners currently owns ScopeCare Ltd., a Vaughan, Ont.-based medical-instrument maker that is a “roll-up” of five smaller companies with operations in Canada, the U.S. and Bulgaria, Mr. Carragher said.
The fund draws on its U.S. health-care investment expertise as part of its pitch to Canadians, he said. “We’ve built and run a number of U.S. companies … for a Canadian health-care company that wants to build outside of Canada – in particular, the U.S., since it’s the most logical place for them to go – we’re absolute experts at it. That’s what we’ve done our entire careers.”
The company has a half-dozen employees who hunt for prospects, going to 25 health-care conferences a year and working on the firm’s database of 43,000 health-care companies. “We’re constantly tracking down people and introducing ourselves."
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.