MTIP holds first close for second fund

Dechert and Equiom are providing advice on the fund.

MTIP Fund II has a target of €200m and was launched in November 2019. "We had around €40m in commitments initially, with more than €25m from the other partners and myself," Christoph Kausch, managing partner at MTIP, told Unquote. "We did this in order to execute the first investments quickly and we have now done three investments from Fund II, which are developing well and are demonstrating a strong value increase so far."

The coronavirus pandemic made the fundraising process more challenging than initially expected, Kausch said. "Last year, as coronavirus happened, it took a bit longer to get to the first close than we originally anticipated, but we did not change the target fund size. We probably lost around six months, the reason being that the first wave of coronavirus meant that LPs stopped investing, then got used to virtual due diligence. But we are absolutely on track in our investment timeline."

MTIP is expecting to hold a final close for Fund II later this year. "We have strong investor appetite and a number of investors who are currently in due diligence, so we expect the final close to be around summer 2021," Kausch told Unquote. "We have sizeable institutional investors already in due diligence, which could bring us to the €250m hard-cap."

The firm's predecessor vehicle held a final close on its hard-cap of CHF 60m in April 2017.

"We invested in eight companies across Europe and have made one exit, Blueprint Genetics, which had returns of 50% IRR after two and a half years," said Kausch. "This year we expect to see at least one additional exit, with most of them to come in 2022."

Fund I's portfolio is performing well, Kausch added. "We are not expecting any write-offs, in spite of the pandemic. This is to do with the stage at which we invest: we look for growth companies, they need to demonstrate that they have market traction, starting with at least €1m in revenues, even though they are not yet profitable."

MTIP currently has a team of 10, according to its website, which includes five partners. "We have a complementary skill set; it's part of our strength that we work as a team on all deals together, which makes us faster and more comprehensive. We can also leverage our sector expertise and can provide a good value-add in due diligence and deal sourcing," says Kausch, adding that the team is also looking to expand. "As of today we will start to expand our team and we will increase the headcount of our investment professionals."

Investors
Around 60% of the fund's LPs are new investors at the first close, with 40% made up of existing investors from Fund I. "Almost all investors from Fund I are also invested in Fund II and most of them increased their commitments," said Kausch. "We have some new investors, including the European Investment Fund as an anchor investor, as well as hospitals, some foundations, corporate investors and family offices who also invested in Fund II. We are now set up and looking for institutional investors."

Investments
The fund will make growth investments in European digital health and connected medical device companies. "We are focusing on digital health, healthcare IT, or medical technology empowered by IT," said Kausch. "So, anything that has a 'digital brain' connected to it. We don't invest in biotech, pharma or classical medtech where there is no digital component."

The vehicle will focus on companies that generate revenues of at least €1m but are not yet profitable, making initial equity investments of €10-15m and up to €25m over several funding rounds, taking minority stakes of 10-30%.

The GP generally holds its portfolio companies for less than five years. Asked about exit prospects for MTIP's portfolio companies, Kausch said: "We still expect that the main exit route will be via strategics, although it could also be an IPO in some cases. PE players are also looking into this space more and more. For Blueprint, for example, the other option next to a strategic buyer was a large PE player."

He added: "The fund term is eight years for Fund II, so in the next two to three years we will have the portfolio established and completed, then there could be some early exits."

The fund has so far invested in three companies: UK-headquartered Type 2 diabetes and obesity treatment and monitoring app Oviva; Sweden-based clinical trial management software Trialbee; and mental health therapy provider Koa Health, which is based in Spain and the Netherlands. The vehicle has a good deal pipeline, said Kausch. "This year we expect to do another three to four investments, and we are currently working intensively on two."

People
MTIP – Christoph Kausch (managing partner); David Germonpré (partner); Erich Platzer, Willi Miesch, Marco Gadola (healthcare partners).

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Venture
• Healthcare
• Technology
• CEE
• Nordics
• DACH
• UK / Ireland
• Benelux
• France
• Southern Europe
• Switzerland
• healthcare