Water Street Healthcare Partners Closes $750M Fund

Chicago’s Water Street Healthcare Partners has closed a third fund, Water Street Healthcare Partners III, L.P., with $750 million. The firm said it exceeded an original target of $650 million, and that fundraising began in early June.  Water Street is a private equity firm focused on the health care industry.


Water Street Healthcare Partners, a strategic private equity firm focused exclusively on the health care industry, announced today the closing of its third private equity fund, Water Street Healthcare Partners III, L.P. (“Fund III”). The fund closed at its cap of $750 million of investor commitments, exceeding the original target of $650 million when fundraising began in early June.  Investors in the fund include leading domestic and international pension funds, endowments and financial institutions, most of which have invested in Water Street since the firm raised its first fund in 2006.


“We are very pleased with the value Water Street has built in its group of health care companies, and the strong results its team has achieved over the past six years,” said Investment Director Brian Welker, Allianz Capital Partners, an investor in Water Street since 2006. “What we appreciate most about Water Street is how it engages its entire team in the value creation process.  It leverages the vast experience of its operating partners with the financial expertise of its investment partners to proactively source and invest in attractive companies, strategically expand their products and services, and build them into market leaders.”


Water Street has completed more than 30 strategic acquisitions and mergers, the majority of which were privately negotiated, to build 16 market-leading health care companies in six years.  The firm has acquired and grown its companies through partnerships with the world’s premier health care corporations including Johnson & Johnson, Medtronic, Inc. and Gentiva Health Services, Inc., as well as founders and executives of middle-market companies.  In the past three months, Water Street acquired Breg, Inc. from Orthofix International, N.V., divested its dental pharmaceutical company, OraPharma, to Valeant Pharmaceuticals International, Inc., and divested Physiotherapy Associates after building into a national outpatient rehabilitation services leader.


“We are deeply grateful to our investors for their overwhelming support of Water Street.  Their recognition of the results our team has achieved and enthusiasm for our strategy enabled us to raise this fund efficiently.  Importantly, by extending our partnership, investors continue to support our strategy of building market-leading companies of greater long-term value in targeted growth segments of health care.  We will continue to invest our team’s deep health care expertise, extensive operating experience and network of industry relationships to create transformational growth for our companies and deliver outstanding results for our investors,” said Tim Dugan, managing partner, Water Street.


With Fund III, Water Street’s total capital under management increases to nearly $2 billion.  Water Street will continue to pursue proprietary investments in four segments of health care: medical and diagnostic products and devices, specialty distribution, outsourced health care services, and specialty pharmaceutical products and services.  Target investments range in size from $50 million to $500 million in value.  Water Street will continue to grow its companies through a combination of strategic acquisitions and organic initiatives.


Water Street closed its inaugural equity fund of $370 million in 2006 and its second equity fund of $650 million in 2008.


About Water Street


Water Street is a strategic private equity firm focused exclusively on health care. The firm has a strong record of building market-leading companies across key growth sectors in health care. It has worked with some of the world’s leading health care companies on its investments including Gentiva, Johnson & Johnson, Medtronic and Smith & Nephew. Water Street’s team is comprised of industry executives and private equity professionals with decades of experience investing in and operating global health care businesses. The firm is headquartered in Chicago.