OrbiMed cuts size of second Asian healthcare fund, seeks to raise $300M

New York-based healthcare focused private equity firm OrbiMed has initiated the process to raise $300 million for its second pan-Asia healthcare fund, the investment firm disclosed in a filing with SEC last week. The firm is looking to complete fundraising for OrbiMed Asia Partners II within a year, as per the filing.

For the global PE firm, which focuses on China and India for building its Asian portfolio, this would mark a cutback on the proposed fund.

Early this year, OrbiMed's founder and managing partner Samuel Isaly had told Reuters that the firm is looking to launch fundraising for the second Asian fund worth $500 million targeting 20 per cent in annual returns. Of this, as much as two-thirds of the total corpus or around $325 million could be allocated to India.

Sunny Sharma, who heads the India team for OrbiMed, had said that the ticket size of most investments of the first fund OrbiMed Asia Partners is in the range of $5 million to $25 million but the new fund would stretch the upper investment limit to as much as $35 million.

As per a previous report by Dow Jones citing sources, OrbiMed was eyeing $300 million and had plans to complete fundraising this year.

An email query sent to Sharma for clarity on the reasons for cutting the size of the fund and its implication for India investments did not elicit any response till the time of publishing this article.

The new fund would, however, be much bigger than the first Asian fund which raised around $185 million five years ago. Bulk of the fund has been committed to companies in China, closely followed  by India. It has also invested in a firm in South Korea.

In India, OrbiMed has around half a dozen portfolio firms, including one where the firm invested through open market operations. It counts amongst its investments bio-pharmaceutical company Bharat Serums and Vaccines Ltd, Condis India Healthcare Ltd, life science company Ecron Acunova Ltd, tertiary care provider Kerala Institute of Medical Sciences and Shasun Pharmaceuticals. It also picked shares of Carlyle-backed Claris Lifesciences.

Globally, OrbiMed manages around $7 billion in assets across its investments in public and private companies. The PE player focuses its investments on biopharmaceuticals, medical devices, diagnostics and healthcare services.

After a bumper 2012, private equity investments in the healthcare sector in India is facing a challenging year with the first half of 2013 seeing almost the same number of transactions compared with the year-ago period. The absence of large size deals resulted in the overall investment value shrinking by almost half, as per data collated by VCCEdge, the financial research platform of VCCircle.

There were 30 deals in the healthcare space spanning pharma, services and medical equipment against 29 deals in January-June last year. The value of announced deals, however, shrank to just around $330 million against $647 million in H1 2012.

The single-largest investment in H1 2013 was International Finance Corporation (IFC) investing $100 million in Malvinder and Shivinder Singh-promoted Fortis Healthcare Ltd. This was through a mix of preferential allotment, subscription to FCCBs and participation in the institutional placement programme (IPP) of the healthcare firm. More recently StanChart PE has raised its commitment to Fortis by picking shares from the open market besides a previously announced preferential allotment and participation in the IPP.

(Edited by Joby Puthuparampil Johnson)

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