C-Bridge closes third healthcare fund at $850m

The fund launched in the first quarter of 2018 with a target of $650 million. A first close of just over $600 million came over the summer and the hard cap was set at $800 million. The capital-raising process was largely completed over six months ago, but the fund remained open to accommodate some additional blue-chip investors, according to sources familiar with the situation. This led to an increase in the hard cap.

LPs include pension funds, sovereign wealth funds, endowments, fund-of-funds and family offices. Temasek Holdings-owned Pavilion Capital, which has backed C-Bridge since Fund I, is said to have re-upped.

C-Bridge was founded in 2014 by Wei Fu, who was previously head of principal investment at Hong Kong-listed financial services company Far East Horizon and before that worked for Goldman Sachs and Temasek. It backs pharmaceutical, medical technology and healthcare services companies. In addition to China, the firm is active in Southeast Asia and South Korea.

The first fund closed at $200 million in 2014 and the second hit its hard cap of $400 million in 2017. Co-investment is a prominent feature of C-Bridge’s strategy, with more than $300 million deployed alongside Fund II. The firm tends to back or build companies with a clear path to monetization, and has a strong preference for control and operational value add, which means there are opportunities for co-investment as clinical trials progress and capital needs grow.

For example, C-Bridge invested in Ascletis in 2014 as part of a $55 million round, once it was confident that the company’s hepatitis C drug would be approved in China. A $100 million Series B took place in early 2017, not long after the approval came through. C-Bridge and its co-investors contributed most of the capital.

Ascletis listed in Hong Kong last year, becoming the first company to take advantage of new rules permitting IPOs by zero-revenue biotech businesses. It now has three drugs – all based on patents acquired from Roche – in early commercialization in China.

C-Bridge has formed a sizeable team of around a dozen managing directors based in Shanghai, Beijing, New York, Boston, and San Diego. The US-based executives help identify intellectual property that can be brought to China. C-Bridge seeks to minimize the execution risk by building a team to guide the drug through the local approvals process. The private equity firm effectively controls the company, which means co-investors can be brought in when required.

Interest in Chinese healthcare is driven by the country’s rising consumption levels and aging population. Healthcare expenditure contributed only 6.1% of GDP in 2015 compared to 17.7% in the US. However, Frost & Sullivan estimates this expenditure will reach RMB11.4 trillion ($1.7 trillion) by 2026, up from RMB4.6 trillion in 2016.

Specialist healthcare GPs active in the market include C-Bridge, Lyfe Capital, Eight Roads, OrbiMed, Lilly Asia Ventures (LAV), HighLight Capital, 6 Dimensions Capital, Panacea Venture, Pivotal Bioventure Partners China, and GTJA Investment Group. Numerous generalist groups – from Yunfeng Capital to Qiming Venture Partners – are also devoting more resources to the sector.

Even among the healthcare specialists, fund sizes and strategies vary considerably, as demonstrated by other recent fundraising activity. Last week, Panacea, which was founded by KPCB alumnus James Huang, closed its debut fund at approximately $180 million. The firm focuses on early-stage deals, with companies that go through an in-house incubation process expected to account for the bulk of the fund.

Earlier this year, LAV closed its fifth healthcare fund – which operates globally but primarily backs companies with a China angle – at the hard cap of $750 million. It represents a meaningful step up in size from the $450 million raised for Fund IV. This reflects the influx in growth-stage deals in China, with LAV backing an increasing number of companies across multiple rounds.

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• Topics
• Greater China
• Fundraising
• Healthcare
• GPs
• China
• C-Bridge Capital