DW Healthcare Partners ups its Canada game with Fund IV’s $295 mln close

  • $295 mln Fund IV is firm’s largest; closes 11% above Fund III
  • Fund IV draws 31 LPs, including a dozen new ones
  • Eyes Canada firms bringing products/services to U.S. markets

DW Healthcare Partners has signaled an interest in doing more deals in Canada’s healthcare industry with the close of its fourth private equity fund.

The Toronto and Park City, Utah, investor today announced DW Healthcare Partners Fund IV raised $295 million in committed capital. It is the firm’s largest fund to date, exceeding by 11 percent the $265 million secured by Fund III in 2013.

The firm’s capital under management now stands at more than $800 million.

Some 31 limited partners joined Fund IV, Managing Partner Andrew Carragher told Buyouts. Most are global institutional investors that committed to prior DWHP offerings. About a dozen new LPs signed on, three of them Canadian institutions.

Fund IV will execute the same strategy that DWHP did over its 15-year history, making about 10 control investments in North American healthcare businesses with EBITDA of $5 million to $10 million. Its bigger size may support “a couple more deals and a few more add-ons per company,” Carragher said.

Carragher says he expects the fund to undertake more Canadian deals than in the past. That’s because DWHP, which has tended to focus on the U.S. healthcare industry, sees opportunity in Canadian companies that have high domestic share and that aim to take products and services into the U.S. market.

Andrew Carragher, Founder & Managing Partner, DW Healthcare Partners
Andrew Carragher, founder and managing partner, DW Healthcare Partners

“We’re agnostic to geography,” Carragher said. “But we feel we have a unique advantage in Canada based on our deep experience in the United States. That experience can help leverage opportunities for Canadian healthcare companies.”

At present, three of DWHP’s 12 portfolio investments are Canadian. They include Isologic, a Burlington, Ontario, provider of radiopharmaceutical services.

Isologic was formed in 2014 with the merger of Montréal’s Pharmalogic PET Services and Cardinal Health’s radiopharmacies in Ontario, a deal DWHP backed. Last year, the company added to its assets, buying the Canadian imaging centres of Lantheus.

Carragher says this activity consolidated the space, creating “a more efficient supply chain.” He expects the result to be increased flows of new and novel products into Canada from U.S. companies that previously lacked a sizeable local partner.

DWHP will tap its substantial Toronto resources to accelerate deal-making. Opened four years ago, the office today houses most of the firm’s 25 professionals, including Carragher, who grew up in the city.

Two-thirds of DWHP investments are sourced via a proprietary process, Carragher said. A key resource is a six-member team focused on acquiring companies using a database of more than 30,000 businesses.

Last year’s PE market in Canada saw steady activity in the healthcare industry, with some 26 deals valued at more than $860 million, according to Thomson Reuters. Top transactions included the Deerfield-led launch of Aralez Pharmaceuticals and Audax Private Equity’s buy of Lifemark Health.

Fund IV has made two debut investments. Last November, it backed Tamarac, Florida, medical-education provider Prime Education. One month later it partnered in acquiring Edge Systems, a Signal Hill, California, maker of aesthetic technologies.

DWHP was founded in 2002 by Carragher and Managing Director Jay Benear, both former healthcare executives. Its senior ranks include Aly Champsi, who joined from Clairvest Group in 2014 and was promoted to managing director in January.

In mid-2016, the firm hired Gabriel Becher, previously with Alberta Investment Management Corp, as a principal.

Since inception, DWHP has deployed $445 million to 26 platform investments and 38 add-ons.

Photo courtesy of Bill Oxford/iStock/Getty Images

Photo of Andrew Carragher courtesy of DW Healthcare Partners