GHO Capital closes second healthcare fund on €975m

The vehicle, which was launched in October 2018 with an €800m target and achieved the largest closing for a specialist private equity fund dedicated to European healthcare. Since it was founded in 2014, GHO has grown its total assets under management to €2bn, becoming one of the largest healthcare-dedicated investment firms in Europe.

This new vehicle is approximately 50% larger than the firm's maiden fund, GHO Capital I, which closed on €660m in 2016 and is now fully deployed. GHO was advised by placement agent Rede Partners and law firm Debevoise & Plimpton on the fundraise.

GHO Capital II raised commitments from 30 LPs, and was significantly oversubscribed, demonstrating strong support from existing and new investors, including pension funds, sovereign wealth funds, asset managers, insurance companies, funds-of-funds and family offices. It has a diverse investor base, with a third of institutional capital coming from Europe, a third from North America and a third from Asia.

The fund will target 8-12 deals by investing in companies operating in the healthcare industry, primarily pharma, medtech and outsourced services, through growth buyout investments. It will invest in businesses with enterprise values of €100-400m and will look to write equity cheques of €50-150m.

GHO Capital II has already made two deals in 2019, investing alongside management in London-headquartered Sterling Pharma Solutions, a provider of small-molecule API development and manufacturing services to the global pharmaceutical industry; as well as in Hamburg-based BioAgilytix, an independent global provider of large-molecule bioanalytical testing solutions.

With a pan-European focus, the fund also has the capability to draw upon GHO's extensive international network to capture and accelerate transatlantic growth opportunities. Within the last six months, GHO exited investments in Caprion Biosciences and Quotient Sciences, having successfully leveraged organic and inorganic growth opportunities to create transatlantic sector leaders. 

Fundraising frenzy
The private equity industry has seen a very busy couple of months: this fundraise follows Xenon Private Equity VII, which held a final close on €300m; Hermes GPE, which closed its PEC IV fund on $603.5m; Northzone, which held a final close for its ninth fund on $500m; EQT Ventures II, which closed on €660m; CVC, which held a final close for its second growth fund on $1.6bn; and Warburg Pincus, which closed its Global Growth Fund on $14.8bn.

Overall, fundraising has picked up steam across Europe for both generalist and sector-dedicated funds, with 32 vehicles raising a cumulative €24bn in October and November alone. In total, there have been 148 funds closing this year so far, raising an aggregate €114bn. This figure has already exceeded the €101bn raised across 183 closings in 2018. With several vehicles wrapping up their fundraising in December, these numbers are expected to rise even further.

2019 value was bolstered by several mega-funds, including the €10bn final close of the Seventh Cinven Fund, which hit its hard-cap in early May; Advent International GPE IX, which held a final close in June 2019 on its hard-cap of $17.5bn; and Permira VII, which closed on its hard-cap of €11bn in October 2019.

Sector-dedicated funds also had a successful year of fundraising and recorded several final closes, including Gilde Healthcare Services III, which held a first and final close on its hard-cap of €200m in March 2019; and Medixci III, which closed on €400m in July 2019.

The healthcare industry has proven particularly attractive in this challenging economic climate, where the forecast downturn induced investors to focus on resilient sectors able to deliver profitability even in a less favourable scenario. The sector has been one of the most active in 2019, with 271 deals inked so far, worth an aggregate value of €16.5bn.

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