Keeping its head while all around them were losing theirs, Domain Associates cashed in late last month by holding a $464 million final close on a fifth investment vehicle that had originally been pitched with a $350 million target capitalization.
Like the firm?s previous vehicles, Domain Partners V will concentrate on the biotech and health-care sectors ? areas in which it has managed to push through six initial public offerings in the past 12 months.
The firm?s track record hasn?t been lost on its limited partners. When all was said and done, the firm had signed on a majority of its existing LPs, as well as five or six new ones, said Arthur Klausner, a general partner with Domain Associates.
He declined to disclose any names, but he did say that Fund V?s LP roster is comprised of corporate pension funds, university endowments and foundations, as well as one or two pharmaceutical companies that have come on board as strategic advisors.
He also revealed that most of the investors the firm had approached were overallocated in technology and underallocated in health care, which may account for the warm reception.
Timing also played a role.
“Our LPs were interested in re-balancing and reallocating and giving health care more money than they had before,” Klausner explained. “When you layer that on top of the performance of the health-care sector in the past 18 months, our timing couldn?t have been better.”
Hence, Fund V will look to back primarily seed and early-stage biopharmaceutical and medical devices firms, as well as other, similar tech-oriented health-care plays. Historically, the firm has pumped 75% of its capital into biopharmaceutical and medical devices, with the remaining 25% spread throughout the rest of the sector, and Fund V will likely follow the same formula, Klausner said.
Private And Public Plays Are Fair Game
Known for investing in “big idea” companies with the potential to change the practice of medicine, the firm is willing to play both on and off Wall Street.
While its newest vehicle will do mostly private placements, it also will invest in three or four public companies, Klausner said. Fund V will likely outfit private plays with $10 million to $12 million over the life of an investment, while the transactions for public companies will be much larger, hovering in the neighborhood of $20 million to $25 million.
For its part, Domain Associates will act as change agents for the public companies it invests in. “We will be very active, taking a seat on the board and helping management to enact change,” Klausner noted.
On the private equity side, the firm intends to co-invest quite a bit. “We?ve always believed in the value of syndication,” he said. “[Lately,] we?ve seen changes in the health-care realm, where there are fewer, but bigger, players, and that means the size of the rounds is larger. That?s a good thing, because these companies need a lot of money, and it?s better to take more than less.”
Already At Work
With offices in Princeton, NJ, and Laguna Niguel, Calif., Domain Associates is mainly a U.S.-centric investor, with biases toward both coasts.
Fund V already has closed three investments, including San Diego-based Conforma Therapeutics Corp., a biotech company dedicated to the discovery and development of anti-cancer remedies; Proxima Therapeutics Inc., a firm based in Alpharetta, Ga., that develops site-specific cancer treatments; and Santarus Inc., a company also based in San Diego that is involved in the clinical development and commercialization of drugs for the treatment of gastrointestinal diseases.
The fund also has seeded two additional companies, but Klausner said he wouldn?t discuss those deals because they were still in their very early stages.
Robyn Kurdek can be contacted at Story Feedback.