Firm: Merlin Nexus
Fund: Merlin Nexus III
Target: $125 million
Merlin Nexus held its first close on the fund, which has a $125 million target, at $40 million in mid-May, and the firm anticipates a final close will be held in the first half of 2009. David Gould, a principal with the firm, declined to put a figure on the next close for
Another differentiating factor, Gould said, is that Merlin Nexus has a shorter investment horizon than most private equity firms. “The term is five years, and we look to hold investments for two to three years,” he said. Most funds have 10-year life spans.
The firm’s first effort,
The three areas that Merlin Nexus targets are late-stage private companies, PIPE (private investments in public equity) deals, and select long-term open market investments. For each investment, the firm looks for the potential for liquidity within two-to-three years of the initial deal as well as a 2-to-3X return on invested capital. The shop’s strategy also calls for frequent communication with the management teams of its portfolio companies.
The first full investment from Merlin Nexus III was a PIPE deal involving Micromet Inc., a Munich, Germany and Bethesda, Md.-based biopharmaceutical company developing antibodies for the treatment of cancer and inflammation. Merlin Nexus co-invested in the $40 million private placement, which was disclosed in early October, with
Micromet shares have roughly doubled since the start of 2008. The stock was recently changing hands at around $4 per share.
The PIPE deal called for the sale of units at $4.25 each. Single units consisted of one common share and a warrant to purchase an additional 0.30 of a share. The warrants expire in five years and are exercisable at $4.63 a share. Micromet isn’t profitable as yet, and is largely counting on the success of the drugs that are still in early clinical development. The company presented new data from two studies on Dec. 7 and Dec. 8 at the annual meeting of the American Society of Hematology in San Francisco.