Good morning, Hubsters. MK Flynn here with the Wire.
Cross-border. Yesterday, Apollo announced it is committing up to €1 billion ($1.04 billion) of managed capital in exchange for a minority equity interest in Sofinnova Partners, a European life sciences venture capital firm based in Paris, London, and Milan. The deal represents a growing trend of growth-stage private equity firms tapping early-stage venture capital firms to get a leg up in life sciences.
Founded in 1972, Sofinnova has backed more than 500 companies. Recent investments include: NanoPhoria, which is developing a non-viral drug delivery platform based on inorganic nanoparticles; Nephris, which is developing novel therapies for diabetic kidney disease; and GFBiochemicals, a sustainable chemical company.
For Sofinnova, the partnership represents a chance to accelerate growth. For Apollo, the investment “will meaningfully increase its presence in life sciences and contribute to its growth ecosystem of partners that bring specialized knowledge and networks to its integrated platform,” according to the deal announcement.
“The life sciences industry continues to grow and innovate, creating significant opportunities to fund and advance new therapeutics and technologies in pursuit of better health outcomes,” Scott Kleinman, co-president of Apollo, said. “Today, Apollo and its affiliates manage more than $5 billion across the healthcare and life sciences industries, and we view this space as a significant growth area for the firm. Sofinnova is a clear partner of choice, with specialized knowledge and a vast industry network that is accretive to our broader investing platform. Together we can leverage our complementary strengths and cultures to form a long-term, mutually beneficial relationship.”
The partnership is one of several pairings of PE firms and VC firms in the life sciences sector. In April, Carlyle agreed to buy Abingworth, a life sciences investment firm. And in November, EQT announced it was acquiring LSP, a life sciences venture capital firm.
For more, see the story from our affiliate pub Venture Capital Journal.
PE Hub and VCJ are both intrigued by these PE-VC partnerships. We’d love to hear more about them. If you’ve got something to share on these, please email VCJ’s Lawrence Aragon at email@example.com and me at firstname.lastname@example.org
Mitigation banks. Vision Ridge Partners said this morning that it has exited a set of three wetland mitigation banking assets managed by The Earth Partners, an ecological restoration company. PE Hub’s Obey Martin Manayiti discussed the deal with Reuben Munger, who founded Vision Ridge in 2008. The firm aims to deliver superior financial returns and positive environmental impact through investments in sustainable real assets.
Vision Ridge invested in TEP in 2016, and the firms have restored and preserved over 2,000 acres of wetland and 60,000 linear feet of stream waters since then. The portfolio includes Gulf Coastal Plains, Houston Conroe and Tarkington Bayou, all in the Galveston Bay region of Texas.
“Mitigation banking is part of the opportunity where we are finding situations that are tied to the sustainable transition that people haven’t spent a lot of time in,” Munger said.
He described mitigation banks as properties in wetlands, streams or other aquatic resources that have been restored or preserved in exchange for credits. Although Vision Ridge is not disclosing the actual returns, Munger said the investment has earned over 70,000 stream credits and over 850 wetland credits. This represents 6.5x the initial stream inventory and 4.3x the initial wetland inventory.
“This project goes to our core purpose of sourcing investments that are part of maintaining a sustainable and natural ecosystem,” Munger said. “Mitigation banking is an example of bringing the three core principles together: preserving land, reducing carbon and improving jobs.”
“We saw over time a chance to earn some private equity style returns with low risk and fantastic impact in these projects,” he said.
For more, read the whole story.
Hard assets. Look for more transportation deals coming from Onex. The PE firm is broadening its focus, including launching a debut transportation offering led by a former portfolio executive, Buyouts’ Kirk Falconer reports.
Onex Transportation Partners, a private equity strategy, was unveiled in the firm’s first-quarter earnings call. It will emphasize investing in “transportation-related assets used for land, air, marine and industrial applications,” president Bobby Le Blanc said.
The fund is timely, in light of growing market uncertainty and volatility spawned in large part by inflationary pressures, Kirk writes. Investments will include “hard assets with long lives, contractual cashflows and an element of inflation protection,” Le Blanc said.
Founded in 1984 by CEO Gerry Schwartz, Onex has considerable experience in the transportation industry. Its active portfolio investments include BBAM, a leased aircraft manager acquired in 2012, and WestJet, a low-cost airline carrier acquired in 2019. WestJet recently acquired Sunwing Vacations and Sunwing Airlines.
Onex’s transportation platform will be run by Wes Dick, a former BBAM senior vice president.
For more on Onex, read the full story.
That’s all for now.