Health Care Firm Secures $200M For First Fund

Health care and life sciences specialist Linden LLC has held the final close on its inaugural mid-market buyout fund, having captured commitments of $200 million. The firm beat its initial target by $50 million.

Eric Larson, managing partner and founder at the Chicago firm, says that hefty contributions came from funds-of-funds manager Parish Capital Advisors, as well as Chicago buyout firm Madison Dearborn Partners LLC, with which it expects to do some co-investments. Larson previously worked with the Madison Dearborn team when they were known as First Chicago Venture Capital, the private equity arm of the former First Chicago Bank. The firm uses the marketing services of placement agent Park Hill Group of New York.

Linden held a first close on the fund in November 2005 at a little over $100 million, and has since invested “a little over 20%” of the entire pool in three companies. Its first buy, in April of 2005, was of Ranir LLC, an oral health products manufacturer in which Linden bought a controlling interest. The deal was sourced by Linden Operating Partner Mary Beth Pieprzyca. Backer Parish Capital Advisors provided the capital for the transaction through a warehouse facility, and ownership was transferred to the Linden fund last November.

As for investment strategy, Linden favors taking controlling stakes in non-core carveouts from larger companies. Playing liberator, Linden “typically takes captives and makes them independent,” Larson says. Like many GPs responding to demand from limited partners to increase their returns via direct investments, Linden allows for co-investments.

Linden expects to build a portfolio of eight to ten companies, averaging two to three deals per year and writing equity checks of between $15 million and $25 million each. With three investments already complete, the fund should be fully invested in three year’s time. Linden can also tap larger investment opportunities because of its alliance with Madison Dearborn Partners.The firm is looking to close a few transactions in the first quarter, says Larson.

Linden recently added Anthony Kesman, a 30-year health care veteran, to its roster of operating partners. The firm was formed in 2002 by former principals of First Chicago Equity Capital, now One Equity Partners (the private equity arm of JPMorgan.) Mr. Larson is a former managing general partner at First Chicago.—E.B.