Regal Healthcare’s Fund II sets sights on $125 mln

Regal Healthcare Capital Partners is targeting $125 million for its sophomore fund after deploying its debut pool in just 14 months, according to a person with knowledge of the matter.

The New York investor in lower-middle-market healthcare-services companies expects to hold a first close in about three months, the person said.

Regal will raise at least $100 million for Fund II, about three-fourths of which has already been committed by existing investors, the person said.

Existing LPs, many of which increased their commitments, include healthcare-services executives and entrepreneurs, some of which have their own family offices.

Investors also include doctors who over the years have invested with David Kim, a seasoned healthcare executive and one of two Regal co-founders.

For the remaining capital, the firm will turn to a limited group of outside investors, most of whom have been referred by current LPs, the person said. Regal is prioritizing value-added investors with experience in lower-middle-market healthcare funds, the person said.

The GP commitment will total at least $16.5 million, the person said.

Kim, whose background includes co-founding CityMD’s predecessor Premier Care Urgent Care, founded Regal alongside Jon Santemma, former managing director and global head of healthcare investment banking at Jefferies.

Fund II will pursue the same strategy as the prior fund, targeting lower-middle-market investments across healthcare services, including multi-site providers.

The firm prefers majority investments but is open to taking minority positions and has the ability to invest deal-by-deal with the backing of current investors, the person said.

The firm will target businesses producing $3 million to $5 million of Ebitda and $15 million to $30 million of revenue. It will commit up to $30 million of equity in each transaction, the person said.

Fund I, which raised $86 million, was deployed across six deals in the autism, fertility, dental, dermatology, emergency-room-management and outsourced revenue-cycle-management sectors.

Among those, Regal in February joined Varsity Healthcare Partners as an investor in newly created Emergency Care Partners, the Pensacola, Florida, provider of emergency medicine and management services. The platform combined with Ascension Emergency Physicians in April.

Also in February, Regal announced a $15 million Series A investment in Extend Fertility, now the largest provider of egg freezing in New York City.

DLA Piper is providing legal counsel to Regal Healthcare on the fundraising.

Action Item: Check out Regal Healthcare latest Form ADV: https://bit.ly/2VCArFX