Lilly Asia Ventures raises $1.35b for healthcare funds

A final close happened on January 22, according to a source close to the situation. The source added that the opportunity vehicle is mandated to invest alongside the main fund. It will not participate in deals on a solo basis, whether these are follow-on rounds for existing portfolio companies that are scaling up or new investments.

A second source noted that LPs committed to both pools of capital on a pro rata basis. This vintage represented another step up in fund size, but it was still oversubscribed. LAV raised $450 million for Fund IV in 2017 and closed Fund V at $750 million two years later, in each case without an accompanying opportunity vehicle.

LPs that have disclosed their participation include Los Angeles County Employees Retirement Association (LACERA). It also invested in Fund V.

LAV has more than 30 investment professionals based in Shanghai, Hong Kong, and Palo Alto, its website states. The firm’s core geographic focus is China, but it can also pursue investments elsewhere that have a China angle. It is stage agnostic and primarily focuses on pharmaceuticals, human therapeutics, medical devices, and diagnostics.

The latest fundraise coincides with a surge in China healthcare investment. PE and VC investors deployed a record $19.1 billion in the sector in 2020, more than the previous two years combined. VC and growth deals accounted for $6.8 billion and $10.6 billion, respectively. Commitments to biotech companies alone reached $4.8 billion, up from $1.4 billion in 2019.

COVID-19 has contributed to this growing interest, having underlined the need for continued government investment in healthcare and emphasized the scale of opportunity in areas like telemedicine. However, the sector also benefits from longer-dated tailwinds, notably the decision to allow listings by pre-revenue biotech companies, first in Hong Kong and then in Shanghai.

Private equity-backed Chinese healthcare companies – across all segments – raised $14.5 billion through 42 IPOs last year, a near fourfold increase on the 2019 total in dollar terms. Hong Kong and Shanghai’s Star Market accounted for the bulk of the proceeds. Of the 14 listings in Hong Kong, nine were pre-revenue biotech players.

LAV saw Jacobio Pharmaceuticals and RemeGen list in Hong Kong, while CanSino Biologics and Sansure Biotech went public in Shanghai. There were also IPOs for equipment manufacturer Peijia Medical Technology in Hong Kong and genetic testing business Burning Rock Biotech in the US. Last month, CAR-T cell treatment developer Gracell Technologies completed a US listing.

Gracell raised $100 million in Series C funding last October. It was one of several LAV portfolio companies that received growth-stage funding during 2020. Others included CARsgen Therapeutics – another CAR-T specialist – InvestisBio, Abbisko Therapeutics, Transcenta, and RemeGen. Transcenta is a product of the firm’s incubation model, whereby it launches new start-ups internally or backs entrepreneurs who join as venture partners.

LAV was established in 2008 as a corporate VC arm of global pharmaceutical firm Eli Lilly, focusing on life sciences investments. It became independent in 2011 and started raising capital from third-party investors in Fund III.

Other recent China healthcare fundraising activity includes Lake Bleu Capital closing a $560 million vehicle that will focus on late-stage deals. The hedge fund player entered the private equity space in 2019 with a $141 million pre-IPO fund.

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• Topics
• Greater China
• Fundraising
• Growth
• Healthcare
• GPs
• China
• Pharmaceuticals
• Lilly Asia Ventures