Toronto- and Montreal-based Persistence Capital Partners is approaching the final close of a third healthcare private equity fund, Buyouts has learned.
Persistence Capital Partners Fund III, which is targeting C$225 million ($170 million), is expected to wrap up in the first half of 2020, according to a person with knowledge of the matter. If the fund reaches the target, it will be about 40 percent larger than its predecessor, which raised C$160 million in 2013.
Fund III held an initial close in late 2018, the person said, linked to the vehicle’s debut investment in Ottawa-based dental service organization MCA Dental Group.
Initial fund commitments came from a range of limited partners, including both new and returning Canadian institutions, the source said. PCP, which is for the first-time marketing to U.S. and international investors, also recently signed up a large U.S. institution.
PCP declined to comment on its fundraising activity.
Fund III is expected to maintain PCP’s strategy of making control and growth equity investments in Canadian lower mid-market healthcare companies.
In Canada’s single-payer system, PCP targets private healthcare opportunities with little-to-no public payer exposure. These make up an addressable market worth about C$85 billion, covering such industry verticals as aesthetics dermatology, dentistry, fertility, optometry, pharma services, physiotherapy and veterinary.
A key focus of PCP’s strategy is roll-ups in highly fragmented sectors. Long a driver of U.S. healthcare investing, consolidations are viewed by the firm as a source of significant untapped potential in the domestic market.
Fund III, which is expected to invest in up to 11 companies, the source said, has already made three investments. Along with MCA they include MedSpa Partners, a Toronto-based medical aesthetics platform. It was formed this year with PCP’s acquisition of two clinics, Buyouts reported this month.
Earlier in 2019, the fund invested in Anova Fertility & Reproductive Health, a Toronto-based fertility care provider.
PCP has also exited portfolio companies of late. They include Medisys Health Group, a Montreal-based corporate health services provider sold last year to Canadian telecom business Telus Corp. Established in 1987 by PCP Founding Partner Dr Sheldon Elman, Medisys was taken private by the firm in 2008.
In addition, PCP in 2018 sold Quebec City-based laboratory testing provider Environex Group. The buyer was Europe’s publicly listed Eurofins Scientific, which is backed by Caisse de dépôt et placement du Québec.
The two liquidity events each generated a multiple on invested capital of more than 2x, the source said.
PCP, which has offices in Montreal and Toronto, was launched in 2008 by Managing Partner Stuart Elman and his father, Sheldon Elman. Other senior members of the investment team include Partners Adrianna Czornyj and John Trang, who together head the Toronto location.
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