DW Healthcare’s fifth fund raises $610 mln

  • Toronto- and Park City-based firm founded in 2002 by Andrew Carragher and Jay Benear
  • Fund IV raised $295 mln in March 2017; has generated net IRR of 53 pct
  • Seeks control investments in healthcare sector with heavy focus on product-based companies

DW Healthcare Partners raised its largest fund to date, collecting $610 million for its fifth healthcare-focused pool of capital.

The Toronto- and Park City, Utah-based firm surpassed its $500 million target, Founder and Managing Partner Andrew Carragher told Buyouts.

Fund V, which closed on Monday, is more than double the $295 million raised in the firm’s fourth fund, which closed in March 2017.

The fund brings the firm’s capital under management to $1.43 billion, the managing partner said.

The vehicle’s LP base encompasses global institutional investors that committed in prior funds, with some nine to 10 new institutional investors having joined Fund V, Carragher said.

DWHP will continue to invest in healthcare opportunities in the US and Canada, remaining agnostic geographically speaking. The firm targets businesses generating $5 million to $10 million in Ebitda and typically makes equity investments in the $15 million to $60 million range.

DWHP will look to deploy about 50 percent of Fund V towards product-based healthcare companies, with the remainder of its portfolio targeting an equal mix of healthcare services and consumer health companies, Carragher said.

While its investment strategy will remain consistent, the firm will work to increase its average ownership stake in portfolio companies to 75 percent to 80 percent, from about 60 percent historically, Carragher said.

DWHP intends to make 10 to 11 control investments out of Fund V, up from about eight portfolio companies in prior funds, he added.

The firm has already made one investment through the new fund, acquiring medical products company CEFALY Technology in June. CEFALY, with headquarters in Liege, Belgium and operations in the U.S., makes a non-invasive product for the treatment of migraine headaches.

DWHP sources approximately two-thirds of its investments through proprietary efforts, supported by a six-member sourcing team separate from DWHP’s investment team, Carragher said. The internal team hunts for companies via a proprietary database of some 40,000 companies, he said.

The private equity shop has deployed all of Fund IV.

Notable investments in the previous fund include HydraFacial, a maker of non-invasive equipment for aesthetic skin treatments, and SoClean, whose technology automates the cleaning and sanitizing of CPAP machines and their masks and tubing.

Fund IV has generated a net IRR of 53 percent, while Fund III has produced a net IRR of 19 percent and a 1.36x multiple, Carragher said.

DWHP still owns five out of eight Fund III investments: Z-Medica, Isolgic, Med-Pharmex, EHE International and Caregiver.

DWHP was founded in 2002 by Carragher and Managing Director Jay Benear, both of whom are former healthcare executives. Carragher held various leadership positions at companies including Ventro Corp and the predecessor of dialysis services giant DaVita.

Other investment team members include Managing Directors Dough Schillinger, Lance Ruud and Aly Champsi.

The firm plans to add another three to four associates to the team amid its latest fundraising, Carragher noted.

Action Item: Reach out to DW Healthcare’s Andrew Carragher at acarragher@dwhp.com