Regal Healthcare brings in $165 mln for Fund II

Regal Healthcare Capital Partners closed its sophomore fund at its hard cap of $165 million, according to a person with knowledge of the matter. The New York firm, which invests in healthcare services companies in the lower-middle-market, beat its $125 million target.

The vehicle’s LP base includes healthcare services executives and entrepreneurs, some of which have their own family offices, as well as doctors who have over the years invested with David Kim, a seasoned healthcare exec and one of two Regal co-founders.

Two blue chip institutional investors that have been active participants in healthcare investing have joined Fund II, the person said. Regal’s GP commitment to Fund II is north of $20 million, the person added.

The closing of RHCP II comes less than 18 months after the firm’s debut fund raised $86 million, bringing its total capital under management to north of $250 million.

Regal has yet to make any exits from Fund I, which, in only 14 months, was fully deployed across six deals in the autism, fertility, dental, dermatology, emergency room management and outsourced revenue-cycle management sectors.

Consistent with its prior fund, Fund II will seek lower-middle-market investments across the healthcare services industry, including multi-site providers. The firm prefers majority investments, but is open to taking minority positions and has the ability to invest deal-by-deal with the backing of current investors.

The fund will target businesses producing $3 million to $5 million of Ebitda and $15 million to $30 million of revenue. It will commit up to $30 million of equity in each transaction, the person said.

Kim, whose entrepreneurial background includes co-founding CityMD’s predecessor Premier Care Urgent Care, founded Regal alongside Jon Santemma, former managing director and global head of healthcare investment banking at Jefferies.

In recent activity, Regal in February joined Varsity Healthcare Partners as an investor in newly created Emergency Care Partners, a Pensacola, Florida, provider of emergency medicine and management services. The platform combined with Ascension Emergency Physicians in April.

Also in February, Regal announced a $15 million Series A investment in Extend Fertility, now the largest provider of egg freezing in NYC. DLA Piper provided legal counsel to Regal on the fundraising.

Action Item: Check out Regal’s latest Form ADV: