Signet Healthcare Launches First Institutional Fund

Firm: Signet Healthcare Partners
Fund: Signet Healthcare Partners Fund III
Target: $200 million
Placement Agent: Benedetto, Gartland & Co.

Signet Healthcare Partners, an expansion-capital investor in pharmaceutical and health care businesses, has set out to raise money from institutional investors for the first time, targeting $200 million.

Signet Healthcare Partners Fund III LP, launched in late October, would be earmarked mainly for both investments in small companies, both public and private, in the specialty pharmaceuticals, pharmaceutical services and medical device sectors, according to a source with knowledge of the fund. The firm, with five senior investment professionals, concentrates on later-stage investment opportunities and senior equity instruments, targeting companies that have achieved or are on the verge of realizing commercial sales of their main products. Signet Healthcare Partners takes both majority and minority stakes in companies.

The New York-based firm was founded in 1998 by James Gale, the former head of investment banking for Gruntal & Co. LLC, and is backed by Sanders Morris Harris Group, a Houston-based investment advisory firm. Sanders Morris Harris Group provided much of the capital for Signet Healthcare’s acquisitions to date. The firm’s sophomore fund, Life Sciences Opportunities Fund II LP, closed on $110 million. Its first $80 million fund was actually a combination of two vehicles, Corporate Opportunities Fund LP and Life Sciences Opportunity Fund LP. At this stage, the firm is looking to move past descriptive fund names and build a brand name under the Signet Healthcare Partners banner.

The buyout shop has invested almost $134 million in 27 portfolio companies since its inception. By Sept. 30 of this year, Signet Healthcare had fully or substantially exited 12 companies, achieving a gross investment multiple of 2.9x and a composite gross IR of 63 percent annually on realized investments, according to our source. For all its investments, including the 15 current portfolio companies that are held at aggregate cost, the firm had achieved a 1.9x investment multiple and a composite gross return of 29.3 percent annually as of Sept 30.

The firm’s portfolio includes Alpex Pharma, a Switzerland-based research and development outfit that manufactures “fast melt” and effervescent tablets; CyDex Inc., a Kansas-based developer of drug delivery technologies to treat asthma, depression, allergies, cancer, arrhythmia and other diseases; and Questcor Pharmaceuticals Inc., a California-based provider of prescription drugs for central nervous system disorders.—J.P.