Specialization matters, says Signet Healthcare; Enterprise software backer Banneker closes 2nd fund

PE Hub continues its series on PE firms investing in healthcare.

Good morning, Hubsters. MK Flynn here with today’s Wire.

PE Hub’s ongoing series profiling private equity firms investing in healthcare continues today with a look at a specialist in the sector.

Value-add. Signet Healthcare Partners focuses on three subsectors: pharmaceutical products, pharmaceutical services and medical devices.

“Each of these three sectors represents large multibillion dollar markets with significant potential for growth, which provides us with attractive investment opportunities,” managing director Ashley Friedman told PE Hub’s Aaron Weitzman.

Recent investments include Juno Pharmaceuticals, Alta Sciences and Ascendia Pharma. Recent exits include the sale of GI Supply to PE-backed Laborie Medical Technologies.

“We are perceived as collaborative and value-added partners, beyond just capital providers,” Friedman said. “Given our durability in these sectors, partnering with Signet provides access to our network of operating partners and a synergistic ecosystem of portfolio companies to collaborate with and potentially accelerate growth. There is really a lot more than just the investment that’s coming with our capital, which tends to be valued by management companies and partners.”

“The sectors we’re investing in are highly dynamic and fragmented,” he continued. “As a result, it pays to be both disciplined and sector specialized. Over the last few years, we all have certainly seen lofty entry multiples, however it appears that those multiples are compressing. So, we may be headed into more of a buyer’s market.”

Despite the challenges of today’s economic climate, Friedman remains optimistic about dealmaking in the healthcare industry.
“We are seeing a consistent cadence of dealflow in our corner of the market,” said Friedman. “It is always difficult to predict how dealflow may evolve through the remainder of the year, but we currently see a strong pipeline that is consistent with what we’ve seen over the last four to six quarters.”

Read the whole story here.

Enterprise software. Banneker Partners, led by Stephen Davis, a former senior executive from Vista Equity, fought through an LP backlash against technology investing to close its sophomore fund, sources told Buyouts.

“Growth technology funds have fallen out of favor as economic pain across sectors has been felt acutely in the tech sector, suffering from the sky-high valuations of the past few years,” writes Chris Witkowsky. “Such funds have been ubiquitous in the private equity fundraising market, though LPs more recently have cooled on the strategy. Still, Banneker, which has been in market since the beginning of the year, managed to beat its target, closing Fund II recently on $550 million, beating its $350 million target, one of the sources said.”

Banneker invests in enterprise software businesses, with annual revenue of up to $50 million. The firm invested deal-by-deal prior to raising a fund, investing around $250 million across four deals, the source said.

The firm has invested in three platforms to date. Banneker led a $38 million investment in L7 Informatics, which provides software for life sciences; it led a $45 million funding in digital health company Hint Health alongside First Cressey Ventures; and it made a growth investment in Eyelit, which provides software for aerospace and defense, battery tech, electronics, medical device, semiconductor and solar industries.

See the full story.

Speaking of emerging managers … If you’ve got thoughts on emerging managers, we’d love to hear them. Participate in the sixth annual Buyouts Emerging Manager Survey, conducted in partnership with Gen II Fund Services.

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That’s all for today. Chris will write tomorrow’s Wire, and Aaron will be on duty Friday. I’ll see you back here on Monday.

Happy dealmaking until then,