Quadria eyes $1b for Fund III, emphasizes health-tech
South and Southeast Asia healthcare specialist Quadria Capital is broadening its scope to include areas such as healthcare technology and digital health insurance for Fund III, which is expected to be up to USD 1bn in size.
“In India, healthcare services and pharma continue to be attractive, but the new-age health companies are where our focus is going to be,” Amit Varma, Quadria’s managing partner, told Mergermarket, AVCJ’s sister publication. He put the range for Fund III at USD 800m to USD 1bn. The firm closed Fund II on USD 595m in 2020 and has deployed about 85% of the corpus.
Quadria, which has USD 2.9bn in assets under management (AUM), has traditionally focused on four verticals: healthcare delivery, such as hospitals and diagnostics services; life sciences; medical technology and consumables; and direct-to-consumer healthcare services.
Earlier this year, the firm made its most overtly consumer retail-oriented investment to date with the acquisition of a stake in Con Cung, Vietnam’s largest mother-and-baby distributor with around 600 stores. The thesis goes beyond pure retail. Con Cung is seen as on a path to becoming an information and services portal for all things related to family health and wellness.
Varma noted that, based on current pipeline activity, 30% of Fund III would likely go into healthcare services, 30% into pharma, 20% into consumer healthcare, and 20% into health-tech.
Quadria will continue to target deals in the USD 100m to USD 150m range, rising to USD 200m to USD 300m if co-investment is sourced from LPs. However, commitments in the health-tech space could be smaller, reflecting the dominance of start-ups in that domain. For example, in February, Quadria and Lightrock India led a USD 125m Series C for India-based digital healthcare platform MediBuddy.
“This is something that would not typically get the Quadria size investment, but we believe very strongly that they are following an innovative model,” said Varma.
Other areas of interest within health-tech include radiology, pathology, telemedicine, remote eye care centres, point-of-care diagnostics, wellness, portable monitoring, data analytics, and digital health insurance.
Quadria has made 27 investments to date. Five out of the nine Fund I portfolio companies have been exited and distributions to paid-in (DPI) is currently 1.3x. "The target is to exit Fund I completed by the first half of 2023, at somewhere close to 3x DPI,” said Varma.
The firm said in its 2020-2021 annual report that Malaysian diagnostic service provider Lablink, Indonesian pharmaceutical player Soho Global Health, and oncology-focused bioinformatics business Strand Life Sciences generated gross multiples of 4.2x, 2.9x, and 1.7x, respectively. It has also exited India-based hospital chain Medica Synergie.
“What we like to do is turn around our fund between five to seven years, which means that we deploy quickly in the first two to three years, mature the companies for the next two to three years, and then start looking at exits,” Varma said.
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