Forbion V has closed on its hard-cap of €460m, exceeding its €375m target.
The firm officially began raising for the fund at its annual limited partners meeting on 7 October 2020, against a target of €375m. It has a Dutch on-shore structure.
Sander Slootweg, managing partner at Forbion, said: “The fundraise was surprisingly smooth. We’ve found that some LPs have directed extra attention and resources to our sector. As a result of the Covid-19 crisis, people realise medical innovation is vital to solving crises like these. LPs are also beginning to consider the non-financial returns of their investments, the impact as such, which you can effectively achieve in this sector.”
The formal vintage for the fund will be 2021, with the firm’s first drawdown occurring then to accommodate LPs who will be able to access their 2021 commitments.
Forbion IV closed on €360m in September 2018. This close of Forbion V follows a series of exits from the firm, including the sale of Promedior for up to $1.39bn and the Inflazome portfolio for up to $380m, both to Roche, and the sale of Kandy Therapeutics to Bayer for $425m.
Investors in Forbion V include a mix of existing and new LPs, with both specialised institutional and corporate investors taking part, including Pantheon, Wilshire Associates, the Ewing Marion Kauffman Foundation and Argentum.
Existing Forbion investors include ASR Nederland, the European Investment Fund, Kempen Capital Management, Kommunal Landspensjonskasse and Stichting Pensioenfonds TNO, according to Unquote Data.
Slootweg said: “Most existing LPs wanted to re-up or upsize and like any GP we are always looking to further strengthen and upgrade our LP base. We did have some inbound interest from new LPs.”
Investors in the fund’s predecessor committed a similar total amount for this vehicle, while the remainder of the fund allowed for new LPs.
“We’re looking for professional LPs that have a long-term view of the business, they’re not just looking for the flavour of the month and are ideally not dependent themselves on a fundraising cycle,” said Slootweg. The fund focuses on endowments, foundations, pension funds and professionally managed family offices.
The fund had a minimum commitment size of €1m and no maximum commitment, although the largest contribution from a single LP was $50m, invested by a US-based institutional LP.
Slootweg told Unquote the firm restricted its fundraising efforts mainly to Europe and the US, because of the size of its team. “Travel was difficult, if not impossible. We had one physical meeting and the rest was online. Over time, maybe towards the next cycle, we could see more Asian LPs,” he said.
The investment period of Forbion V will commence in 2021, with the aim of building a portfolio of approximately 15 companies, of which at least a third will be companies created by Forbion. These buy-and-build platforms will be based around assets sourced from pharmaceuticals or academic institutions, or around proven management teams. The remainder of investments will be in existing companies.
The fund can allocate approximately 10% of the fund to one single investment, but the firm does not expect to deploy its tickets at one stage in an investment. “These are cash-burning companies that need two or three fundraising round to get to an exit,” Slootweg said.
The fund has an investment period of five years, but Slootweg said the firm typically is able to construct a portfolio in 2.5-3 years, with the remainder of the time dedicated to deploying money in follow-on rounds.
Forbion is currently working on 2-3 deals, which Slootweg expects to close in Q1 2021. One early-stage company is developing a protein-based treatment and is based in the UK.
“I’ve been really impressed with the quality of the opportunities out there,” said Slootweg. “We’ve seen the industry take off and the number, quality and maturity of opportunities increase.”
As with its previous funds, Forbion V will primarily focus on Europe, comprising approximately 80% of investments, with the remainder of the fund targeting opportunities in North America. Forbion will target substantial initial stakes of 20-50%, by taking lead positions.
Forbion – Sander Slootweg (managing partner).
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