Forbion exceeds Growth Opportunities II target with EUR 470m first close

Rachel Lewis
09 June 2022

Tweet
Facebook
LinkedIn
Google plus
Send to

Dutch biopharma investor Forbion has held the first close for Forbion Growth Opportunities II at EUR 470m; the fund will invest in late-stage biopharma companies at a time when they need private capital, the GP told Unquote.

The first close of Forbion Growth Opportunities Fund II has already surpassed the fund's EUR 450m target.

Forbion is aiming to close the fund by late summer on its EUR 600m hard-cap, said managing partner Sander Slootweg.

The fund's predecessor, Forbion Growth Opportunities Fund I, closed just 18 months ago at its hard-cap of EUR 360m. "We came back earlier than some of our LPs expected," added general partner Dirk Kersten.

"Two and a half years ago, we were confident there was an opportunity for late-stage investments in biopharma, it's now a proven and successful strategy," said Kersten.

Growth Opportunities Fund I has already made one exit, reaping 3.9x on the USD 1.5bn sale of Gyroscope Therapeutics to Novartis. That fund is now fully committed via nine platform investments and has some dry powder reserved for follow-ons, Kersten said.

Across all its strategies, Forbion makes 70% of its exits via M&A, mostly to big pharma.

Investors
Around 75% of the fund's LPs are institutional and several new ones have joined, including pension funds PME and PMT, alongside the Ewing Marion Kauffman Foundation and family office Reggeborgh, Forbion said in a statement.

Pantheon, Wealth Management Partners, and pharmaceutical company Eli Lilly have returned for Fund II. About 80% of Fund I's LPs have recommitted, with many of the remainder working on investments to make up the final close, Kersten said.

Co-investment is possible on a deal-by-deal basis and could be of interest to some of the larger LPs where the capital needs syndication partners, he added.

Investments
The fund will invest in late-stage biopharma companies that develop novel therapies for areas of high medical need via three strategies: private capital, pre-IPO funding for near-term listings, and building positions in undervalued public companies.

"We saw an opportunity on the late end of the spectrum, drug development companies, need to raise large rounds to file for approval of new drugs," said Slootweg.

It will invest an average ticket size of EUR 35m-45m, which is up around EUR 5m from the first fund, going up to EUR 70m where necessary.

The strategy comes at a time when these late-stage companies are not able to turn to public markets for capital raises thanks to a shuttered market. Forbion can instead underwrite clinical development plans that are two or three years away and require pockets of cash, said Kersten.

"There are a lot of very exciting European biopharma companies. The public markets are closed, so where do they go? There are only three dedicated late-stage investors in the US. We have fresh money to help," he added.

The fund is, therefore, well-positioned for PIPE transactions, with 150 small-cap biotechs trading under cash and other listed peers struggling across the board.

"For us, clearly it's an opportunity to find the best out of those 150 and help them finalise their clinical development plans, and help companies to get to the finish line," said Slootweg.

The new fund has already made two undisclosed deals — one private and one public — that it hopes to close in the next couple of weeks.

Sector-wise, the firm is agnostic over the therapeutics area. It will invest in all permutations of antibodies, small molecules, and gene therapies, among others, but is less keen on cell therapy because the sector is more early-stage and requires a lot of capital.

People
Forbion – Sander Slootweg (managing partner); Dirk Kersten (general partner).