Ex-Avenue, CLSA executives seek $200m for Asia healthcare fund

The new firm - known as Aequus Capital Partners - is currently in the soft marketing stage, reaching out to a select group of investors as looks seed funding for 6-7 deals that will be completed ahead of the formal fundraise. China is the principal area of focus, while India and Southeast Asia will be addressed on an opportunistic basis.

The three co-founders and partners are: Dr. Amit Kakar, who until recently led Asia healthcare investments for Avenue Capital; Chris Seaver, who last year stepped down as CEO of CLSA Capital Partners; and Mark Maciejewski, co-founder of Dinova, which focuses on the medical devices sector. They will be joined by members of Kakar's team at Avenue Capital.

"We will invest in companies that are looking for growth capital and expertise that allow them to have a higher market penetration, secure domestic regulatory approvals, protect their intellectual property and do manufacturing," said Kakar. "A lot of these companies have products that have already cleared regulatory hurdles in foreign markets but they are looking to come into China."

As such, while medical device manufacturers will feature strongly in the fund, coverage is not limited to domestic players. Aequus wants to take disruptive technologies from the US and launch them in China, and ultimately in other Asian markets as well. This would typically involve acquiring the regional distribution rights to a product or technology.

"Lung cancer is one of the biggest healthcare challenges faced by China today and so we have been looking at technologies in early-stage diagnosis and treatment of lung cancer," Kakar explained.

The private equity firm will make investments of $10-25 million. There is little appetite for the hospital acquisitions currently in vogue in China due to the increasingly high valuations. Rather, Aequus will leverage the services opportunities that have emerged as a result of China's comprehensive healthcare reforms by targeting more specialized operators. Diagnostic and check-up centers are of particular interest.

"The capital requirement is in our sweet spot and the government is very open to driving specialized care away from public hospitals and providing access even at tier-two city level through these clinics," Kakar said. "Oncology and diabetes are the two big themes we are working on."

India is seen as further along the evolutionary curve than China - for example, doctors were first allowed to move into private practice two decades ago, something which is only just happening in China. However, there are similarities in the opportunity sets: valuations are high at the corporate hospital group level so there is more interest in stand-alone clinics.

While at Avenue Capital, Kakar was responsible for a significant minority investment in Global Health Private, owner and operator of the Medanta - the Medicity, a super-specialty hospital in Delhi. The holding was exited in late 2013 to The Carlyle Group. He sees secondary and trade sales, rather than IPOs, as the logical exit route for Aequus portfolio companies.

"Global M&A has been strong and healthcare is a hot market," he said. "Large strategic players are looking to get into new markets and the big PE firms are creating portfolios of healthcare assets."

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• Topics
• Fundraising
• Healthcare
• Expansion
• Greater China
• China
• India
• healthcare
• Growth capital
• Fundraising
• CLSA Capital Partners
• Aequus
• Avenue Capital Group