Consonance Capital breaks through fundraising drought; Social-distance PE walks with TA Associates

Consonance Capital raises $856 million for fund despite current downturn

Hi, everybody!

If you weren’t aware, each day at 7 p.m. there’s a ritual taking place: New Yorkers (and Brooklynites, like me) hang their heads out their windows or step out on their stoops or patios, applauding, playing music and banging together pots to thank healthcare workers on the frontlines. Not only does it remind me that evening has hit, but it’s a nice way to feel unity in the midst of the crisis. It’s also evolved into a sometimes-comical social hour during which, at distance, I’ve kept up with local drama and gotten to know a diverse range of neighbors that were strangers just weeks ago.

Deal scoop: Deal news was sparse this week; however, Warburg Pincus joined Arichimed as an investor in Polyplus. The deal is valued in excess of €500 million ($542 million), a source close to the deal told me. The firms declined to comment.

Warburg and Archimed will own equal stakes in the gene therapy company. Over four years, Polyplus revenues have increased 10-fold, with ArchiMed holding 90 percent of Polyplus, the European investing house said. Read more.

Breaking the fundraising drought

As my colleague Chris Witkowsky has written about extensively, fundraising largely is considered to be a challenging prospect in the current environment. LPs are worried about liquidity and many are more concerned with defending their investment funds than making new investments.

I’m happy to report that one healthcare-only private equity firm that has long kept a low profile wrapped up fundraising in under three months. Consonance Capital Partners announced that it had raked in $856 million for its sophomore fund, closing on April 8 at its hard cap.

Consonance, whose founders spun out of JPMorgan Partners and its successor and predecessor entities, launching the New York firm in 2005, has generated a 5x return to date on Fund I, which is more than 80 percent invested, a source familiar with the matter told me.

The firm also appears to be in a good position to continue to deploy capital amid the current state of the lending market.
At Consonance, returns have always been driven by top line and EBITDA growth. Five of the seven platform companies purchased out of Fund I had no leverage at close and were financed with all equity up front, said Benjamin Edmands, managing partner and co-founder of Consonance.

“We don’t rely on financial engineering,” he said. “It’s really about company building and trying to get the company strategically focused on value creation.”

As a side note, Consonance has two companies directly combating covid-19.

One is Summit Medical Group-CityMD, comprising many frontline workers in Northeast hot spots. The other is Bako Diagnostics, which took its expertise in PCR (polymerase chain reaction) and re-purposed that technology to develop and receive approval for a covid-19 test in a matter of weeks.

Whereas PCR tests to see if an individual has the virus, Bako is separately developing a serology test to identify antibodies, a proxy for covid-19 immunity, Edmands told me.

“Testing is going to be a huge need and a huge component of our getting back to work and getting the economy going,” he said.

Check out my full interview with Edmands for more detail around the firm’s strategy.

Top Scoops
Life Under Quarantine: I recently caught up with Mark Carter, co-head of TA Associates’ healthcare group, for a behind-the-scenes look at how the investor is navigating his new life under lockdown.

Among other things, the idea of 6-foot-social distance PE walks in the Boston area is spreading, Carter told me. Taking a break from Zoom, there’s a “round robin of firm heads” coming together to brainstorm and talk things out as PE groups navigate through never-before-seen challenges, he said. For picture proof – and more on how Carter is virtually inviting colleagues and management teams into his home – check out my full report.

Giving Back: Healthcare I-banks have joined PE firms in the act of charitable giving. One example is Cain Brothers, which on April 9 kicked off the Cain Brothers COVID-19 Charity Challenge. Within the first eight days the bank raised ~$325,000 for 10 local, national and international charities, the firm told me.

Drama: Leonard Green & Partners came under fire from activists at a recent pension fund meeting over its stewardship of portfolio company Prospect Medical Holdings, even as the firm is on the verge of exiting the investment, wrote Justin Mitchell, my colleague over at Buyouts. Read more.

That’s it for me today. As always, reach me at springle@buyoutsinsider.com with your comments, tips, or just to stay hello.