HC-Focused Firm To Close Debut Fund Above Target

Firm: EDG Partners LLC

Fund: EDG Partners II LP

Target: $150 million

Placement Agent: Touchstone Group LLC

EDG Partners LLC expects to close its debut fund above its $150 million target in December, a source close to the fundraising told Buyouts.

The Arlington, Va.-based firm will close the fund near its $200 million hard cap, the source said.

The tally suggests investors like EDG’s niche strategy of targeting deals in businesses providing health care information technology, distribution, outsourced services, disposables and consumables while avoiding companies that focus on medical devices, biopharmaceuticals and life sciences companies subject to Food & Drug Administration approval risk. Buyouts reported in August that the firm had so far raised $92 million through two closings.

Touchstone Group LLC, a New York-based placement agency, is helping the firm raise the money.

EDG Partners invests $5 million to $25 million at a time. The firm’s portfolio has included Gemino Healthcare Finance, a company that lends term loans and revolving credit lines to health care service providers; Caresite Pharmacy, an operator of nine clinical pharmacies; and Regency Healthcare Group LLC, an operator of three hospice brands.

Three executives with backgrounds in private equity health care investing and as health care company executives founded EDG Partners in 2004.

Prior to founding the firm, co-founders Steve Eaton and Alan Dahl partnered on transactions that developed into Genoa Healthcare, an operator of on-premises pharmacies for mental health facilities, and Housecall Medical Resources Inc., a provider of home health services and products. Mike Gaffney, the other co-founder, had led health care investments for Allied Capital and worked closely with Eaton and Dahl after Allied Capital bought Housecall in 2002.

Eaton, Dahl and Gaffney embarked on seven deals after founding the firm, funding them on a deal-by-deal basis with their own capital and with commitments from other private equity firms and high-net worth individuals. Buyouts reported in August that the firm had so far exited four of those investments, which together the firm calls “Fund I.”