Andera Partners lines up DACH expansion plans

Paris-headquartered Andera Partners announced in April 2021 that it had expanded to the DACH region with an office in Munich, with life-sciences-focused partner Olivier Litzka relocating there to head the firm's DACH region development.

The rationale behind this expansion was threefold, Litzka says: "We have been able to invest in the DACH region previously from Paris, but we were less close to the companies than if we were to be there. There has been a lot of incredible advancement in the region and BioNTech and CureVac are just the tip of the iceberg. There is a spotlight on German biotech now, which is a coincidence, as we had planned the move there for longer than this."

"I will also act as a path finder for our growth capital, mezzanine, green energy and infrastructure strategies, where our team is also thinking about expanding beyond France," Litzka adds. However, he noted that this will not be immediate. "We will start to think more about this in 2022."

Thirdly, fundraising and building LP relationships was a key motivation for Andera's DACH expansion, Litzka says: "We also want to find new investors for our funds as we are growing. We have built up a 'who's who' of LPs in France and expanded internationally over the years, but not so much in the German-speaking areas."

Fundraising goals
The DACH expansion coincides with a period in which Andera is on the road for BioDiscovery 6, a biotech- and life-sciences-focused fund that the GP expects to close by the end of 2021. The fund held a first close in February 2021 on around two thirds of its target and it expects to raise €400-450m.

"We have a few DACH LPs already, but we want this to grow," Litzka tells Unquote. "It's not an easy undertaking to do this with life sciences and venture capital, since this has not traditionally been on the agenda for LPs in Germany – but the increased spotlight on biotech and life sciences helps and we are seeing LPs becoming very interested in what we do."

"Having large tickets from LPs is always a good scenario, but it takes time," he adds. "We need to get to know them, and it is virtual at the moment, which is not the same. We will look for family offices, pension funds, health insurance companies and high-net-worth individuals (HNWI)."

Building relationships could involve different amounts of time and different processes for each group of LPs, Litzka says. "If you have the chance to sit in front of an HNWI who has an appetite for what you do, you might have the ticket after one meeting. But this is not how it generally happens with institutions, there will be first and second meetings, followed by data rooms, with maybe five to 10 meetings in total."

Litzka expects that this relationship-building will also generate future interest for Andera's other strategies: "The more we get to know the LPs in the DACH region, the more they will ask us what else we do and what different asset classes we have in the firm."

Building on biotech
BioDiscovery 6 will deploy tickets starting in the €2-3m range for early-stage deals, with tickets of up to €20-35m available per company for later rounds. "We have a strong pipeline: we see more than 500 opportunities per year but make four or five deals per year," Litzka tells Unquote. "We have not yet invested from BioDiscovery 6 but we have made our final investment from BioDiscovery 5."

BioDiscovery 5 held a final close in January 2018 on €345m, surpassing its €250m target. The fund's investments include Germany-based adoptive T-cell therapy developer T-knife as well as Germany-based JenaValve, a medical equipment company that develops transcatheter aortic valve implantation (Tavi) systems for aortic valve disease.

Now is an exciting time to be investing in the life sciences and biotechnology sectors given the market's development over time, Litzka says: "2010-2020 saw a tremendous biotech-driven delivery of new products and solutions, which has become visible to a larger public, which is why there is this interest; the industry has delivered on HCV, cancer, immunotherapy, orphan drugs, and more – there have been incredible solutions. While the 2000-2010 period was more 'back to school', 2010 to now has been eye opening."

This development is visible in the composition of drug development in the current market, Litzka says: "The industry has transformed in the last few years, and the power of this industry and the technology behind it is shown by the fact that more than two thirds of new drugs and vaccines today come to the market from internally developed companies, leaving only around 25-30% for big pharma."

Public markets continue to present attractive exit opportunities for the companies in which Andera invests via its BioDiscovery strategy, Litzka says, although the conditions must be right for such exits to be successful: "There is obviously public market interest in life sciences and biotechnology, but you need to position these companies well before they go public. This means having great assets, very experienced teams, and a strong transatlantic investor base if possible, opening the potential for an IPO."

In the meantime, while Litzka heads up Andera's DACH expansion, the firm will take a prudent approach to the team on the ground. "There will be new hires, but not immediately," Litzka says. "We have 15 people in Paris and this will be all the infrastructure we need for now. We will settle and path find, but this expansion does not mean blowing up our organisation."

Click here to view a profile of Andera Partners on Unquote Data.

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