Family office Hildred Capital in talks to raise outside capital

  • Family office has made 11 private investments in ~3 years
  • Hildred likely to bring in outside capital in 6-12 months
  • Solomon: Crown’s sales could reach several-hundred-million-dollar range in 1-2 years

The family office launched by former Forest Laboratories executives may be on a path toward more sizable deals as it weighs bringing in third-party capital, according to one of Hildred Capital Partners’ co-founders.

Hildred, founded by father and son Howard and David Solomon in 2014, said Monday it would buy a majority stake in Crown Laboratories Inc. The deal is the 11th private investment for Hildred, which the Solomons launched after the $28 billion sale of Forest Labs to Actavis plc.

David Solomon declined to comment on the terms of the investment. Hildred aspires to build the skincare-focused specialty pharmaceutical company to meaningful scale, he said.

Add-ons in sight

“There’s an opportunity to build a business that’s got several hundred million in sales in the next year or two,” Solomon said of the Johnson, Tennessee, company best known for its Blue Lizard Australian Sunscreen.

Hildred, which Solomon said explored a number of opportunities in the space before engaging with Crown several months ago, is in advanced discussions when it comes to potential add-on deals, licensing or partnership agreements.

Crown plans to consolidate in the three areas of dermatology in which it operates: medical, aesthetic and over-the-counter, Solomon said.

Solomon said he expects opportunities to arise as large pharma companies divest non-core assets and as privately held assets that are too small to garner attention from giants like Allergan or GlaxoSmithKline come available.

Hildred, which the Solomons lead alongside CIO Andrew Goldman, may soon have the capacity to make larger bets itself.

While the firm’s investments typically range from $5 million to $50 million, raising third-party capital could enable the firm to engage in larger deals.

Solomon declined to comment about fundraising but said the firm is in serious discussions. “It’s likely to happen within one form or another within [six to 12] months, whether on a single deal or a larger overall arrangement,” he said.

Howard Solomon, 90, was CEO of Forest Labs from 1977 through September 2013, helping lead its transformation from a small vitamin business to a multibillion-dollar pharmaceutical behemoth. He also was chairman of the company from 1998 through the company’s July 2014 sale.

David Solomon spent 14 years at Forest Labs, most recently leading the company’s M&A, licensing and product acquisition efforts as SVP of corporate development and strategic planning.

The duo’s Forest Labs experience also bodes well for the firm. They’ve navigated through strategic and operational challenges, worked with insurers and providers, and dealt with the complexities of reimbursement for years, Solomon said.

“A lot of the PE investors that we meet with have not actually run a business,” Solomon said. “Having done that is really useful.”

The firm has also leveraged its deep roots and relationships in the healthcare arena. For instance, Hildred brought in former Forest Labs colleagues and specialists to help evaluate commercial opportunities and manufacturing capabilities for Crown, Solomon said.

Taking an active role

While Hildred doesn’t require a controlling ownership position, it’s important for the firm to have an active role in its investments, often through board representation, Solomon said. The firm’s investments range from deals in which it is the sole investor to co-investments with other families or PE groups.

Hildred invests in a broad range of securities including equity and debt, seeking opportunities in industries ranging from regional banks to real estate. Not surprisingly, Solomon described healthcare as the sector in which it is particularly well-suited.

In connection with Hildred’s current investments, David Solomon serves on the board of Quantum-Si; holds a board observer seat at Kareo; is an executive partner at Tyree & D’Angelo; and is member of the shareholders’ council for Columbia Care.

Named after their dog, Hildred, the firm today manages only the wealth of the family.

Update: This story was updated with a more recent timeline that reflects the firm’s decision to raise outside capital.

Action Item: Learn more about Hildred Capital: http://hildredpartners.com/index.php

Photo courtesy of Hildred Capital