Webster Equity Partners is officially in the market with Fund V, its first healthcare-exclusive vehicle, according to sources with knowledge of the matter.
Webster Equity Fund V, with a $1 billion target, hopes to hold a first close in mid-December, sources said.
The firm’s fourth pool of capital, which closed on $875 million in 2018, is 75 percent deployed and close to 100 percent called and reserved, a source said. Webster Capital Fund III LP collected $400 million in 2014.
Webster’s fifth vehicle will invest in healthcare services only, targeting non-discretionary and medically necessary healthcare companies in the middle market.
Fund V solidifies the private equity firm’s transition to a healthcare-only strategy.
Webster, founded in 2003 and based in Waltham, Massachusetts, has narrowed its focus over the years, having previously put capital to work in the branded-consumer and business-services sectors. Today the firm targets profitable healthcare businesses typically generating $20 million to $200 million in revenues.
Todd Rudsenske, a former longtime banker at Cain Brothers, a healthcare-focused division of KeyBanc, joined Webster as a partner in July. Rudsenske now co-heads the firm’s daily operations alongside Doug Williams and John Garbarino, existing partners at the firm.
Rudsenske’s addition brought the firm to a 15-person roster, versus a 12-person team investing across two sectors when Fund IV was raised two years ago.
As Webster kicks off fundraising for its latest fund, the firm is also considering exploring a secondaries continuation vehicle for two existing Fund III portfolio companies: BayMark Health and Pharmalogic, one source said, cautioning that nothing has been decided.
BayMark, the country’s largest opioid-treatment company, generates EBITDA north of $70 million, whereas Pharmalogic, a specialty nuclear pharmacy business, posts $50-million-plus in EBITDA, the source said.
Several secondaries processes, including single-asset continuation situations, have or are anticipated to hit the market as it emerges from the pandemic downturn.
For instance, after selling a stake in Ivanti to TA Associates, Clearlake Capital Group wants to extend its backing of the portfolio company through a process that would move the software business out of older funds into a continuation vehicle, Buyouts wrote in August.
Elsewhere, Thomas H. Lee Partners is seeking to raise $400 million to $600 million to move HighTower Advisors out of Fund VII and into a continuation vehicle, Buyouts previously reported.
Meanwhile, Webster’s existing portfolio companies have remained active through the pandemic downturn.
In August, Santa Monica Fertility announced its acquisition of Newborn Advantage Surrogacy, a Dallas-based surrogacy agency. Integrated Rehab Consultants and Belmar Pharmacy have also struck add-on acquisitions through the summer months.
In new platform activity, Webster in early April launched a gastroenterology platform, One GI, after clinching an all-equity deal for Tennessee’s Gastro One. Webster agreed to make an equity investment of approximately $22 million in Gastro One, reserving up to $80 million in total equity for the new platform, Buyouts‘ sister publication PE Hub wrote.
Webster declined to comment.
Action Item: Read more about Webster’s shift to a healthcare-only strategy on PE Hub.