New Health Raises $150M For Medical Investing

Firm: New Health Capital Partners LLC

Fund: New Health Capital Partners Fund I LP

Amount Raised: $150 million

Placement Agent: Probitas Partners

A pair of veteran health care investors from Fortress Investment Group LLC seek to replicate their investing strategy under their own banner.

New Health Capital Partners LLC announced that it had raised $150 million from ORIX USA Asset Management to launch its inaugural fund, New Health Capital Partners Fund I LP.

Aron Dantzig, who founded New Health Capital along with Richard Baxter, told Buyouts that the firm is structured as a credit opportunity fund but has the flexibility to pursue a variety of strategies. “We like to view ourselves as opportunistic investors,” Dantzig said.

Dantzig and Baxter were, since 2005, co-heads of the health care group of the Drawbridge Special Opportunities Fund, the specialty finance fund of Fortress Investment Group. Dantzig said he had agreed not to discuss his former employer.

The principals have completed one transaction since going out on their own this year, but Dantzig said he couldn’t discuss the details because of a confidentiality agreement. The firm is reviewing a number of potential transactions, some of which are in advanced due diligence, he said. “We are aggressively building out our pipeline.”

ORIX USA Asset Management is an arm of ORIX USA Corp., the U.S. subsidiary of ORIX Corp., a publicly owned Tokyo-based international financial services company established in 1964. Dantzig said he could not discuss whether the firm continues in fundraising mode.

A typical loan candidate for New Health Capital would have an FDA approved drug to bring to market, “but they’re burning cash,” Dantzig said. New Health Capital could structure a loan based on the monetization of royalty cash flow, he said. Alternatively, the firm plans to offer senior secured loans to medical device companies, or it could make control equity deals for legacy pharmaceutical products, such as drugs that are off-patent.

The smallest check New Health Capital would be for $10 million, but the firm has the capacity to do deals up to $150 million or $200 million of equity with co-investors, Dantzig said. “We have the capability to scale up substantially.”

The firm plans to invest exclusively in the market for regulated drugs and medical devices. “We only deal with things that are FDA approved. We don’t deal with things that are in the clinic or in the pipeline,” Dantzig said. “It’s a very novel form of capital.”