Global health-care investment firm MPM Capital is currently marketing a new fund named MPM BioEquities Fund, which will invest in biotechnology and life science companies around the world sometime next year. The fund is the third investment vehicle launched by MPM Capital and will be headed by Kurt von Emster, an MPM partner and former manager of the Franklin Biotechnology Discovery Fund and the Franklin Global Health-Care Fund.
MPM BioEquities will utilize a hedged investment strategy in that it will invest most of its capital in the small and mid-cap segment of the biotechnology industries, with about 85% of the fund dedicated to public securities and 15% to late-stage private investments.
The fund is expected to close within the next few months at up to $500 million. So far, the lead investor seems to be the California Public Employees Retirement Systems (CalPERS), which has already contributed $100 million.
The 15% will be dispersed among less than 10 private mezzanine-round companies, the first of which has already been selected. Although von Emster would not disclose the lucky recipient’s name, he did say that it is a large spin-out of an existing biotech company. He added that the Cambridge-Mass.-based investment firm is also looking at providing private equity capital to two European biotech companies and three in the U.S.
How much each company receives will depend on the size of the fund. If is reaches its $500 million expectation, von Emster said he will invest on average about $5 to $10 million.
MPM currently has $830 million committed, equal to the total amount of its first fund. Its second fund, MPM BioVentures II, raised $600 million with roughly half already committed.
Contact Danielle Fugazy.