Arduous fund-raising conditions aside, MTS Health Partners isn?t settling for anything less than the $150 million it vowed to raise when it launched its debut investment vehicle this time last year. Last week, the New York-based private merchant bank inched a little closer to its target when it held a second close with $110 million worth of committed capital.
The firm, which hopes to provide equity capital and strategic advisory services to health-care companies, closed on $95 million back in April.
“We will continue to fundraise but will close the fund no later than mid-2002,” said Curtis Lane, a founding partner at the firm. “We are already looking at four deals.”
While Lane would not say precisely which companies his firm is looking to back, he did say that MTS is hoping to close on at least one deal by year-end. Lane is also expecting to put about $10 million to work in each deal and also to spend a lot of time getting his hands dirty.
“MTS is not there to just give money, but also to lend its expertise to any company we get involved with,” he said.
The fund is expected to be fully invested within the next three years. Furthermore, it will not have any geographic limitations. It?s also unique in that it isn?t solely focused on making straight venture capital investments.
“We are interested in pursuing recaps, LBOs and growth capital deals. And we don?t want to fund anything that could be a technological risk. We are not working with start-ups,” Lane said.
Most of the fund?s limited partners seem to be high-net-worth individuals, while the rest are the usual suspects, including corporate and institutional investors such as JP Morgan Partners, WellPoint Health Networks and Blue Cross Blue Shield of Michigan.
According to Lane, every LP who has given money to MTS knows something about the health-care industry and is expected to create deal flow for the new fund.
He went on to note that the health-care industry is one of the fastest-growing segments of the economy and is expected to represent 17% of GDP by 2007.
“We are in a great position because people are finally focusing on health care. There is a lot more interest than there was a year ago because people are understanding it better,” Lane said.
In addition to closing on the new capital, MTS also added an employee to its 10-person roster. Andrew Paul has been named chairman of the new firm. Paul, a former senior partner at Welsh Carson Anderson & Stowe who was responsible for health-care investing, and Lane have had an ongoing working relationship for more than 15 years.
Danielle Fugazy can be contacted at: Danielle.Fugazy@tfn.com