DRI Capital, a private equity firm which invests in drug royalty streams, has raised $600 million for its second fund, a source familiar with the situation said. The firm originally targeted $500 million for Drug Royalty II LP, but has continued to accept new commitments.
DRI Capital’s first fund was a 2006 vintage with $800 million $240 million in commitments. Update: The $800 million total includes debt; $240 million was equity.
Investors like the fund because it has predictable cash flows and provides quarterly returns in the same way a mezzanine fund would, the source said. Further, DRI follows strict guidelines for choosing drugs to invest in. The drugs must be FDA-approved, and are often for the treatment of chronic disease. This takes much of the risk and uncertainty out of the investments, the source said.
Atlantic Pacific Capital is the firm’s placement agent.
According to Buyouts magazine, the fund may allow commitments of up to $700 million, which is the hard cap. Investors to the fund include San Diego County Retirement Association, Arizona Public Safety Personnel Retirement System, Los Angeles Fire and Police Pensions, Louisiana State Employees Retirement System, New Mexico Educational Retirement Board, San Bernardino County Employees’ Retirement Association, Buyouts reported.