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Essex in the News
Essex Woodlands Closes
$600M Fund In A Flash
by Tennille Tracy
Venturewire.com, May
22, 2006 -- Essex
Woodlands Health Ventures has collected $600 million for its seventh
private equity fund after a speedy fund-raising campaign that lasted
less than two months, VentureWire has learned. The firm closed its Essex
Woodlands Health Ventures VII LP fund on May 18, after signing up 11 of
its existing investors, including Adams Street Partners, Michigan State
Employees' Retirement System, Pantheon Ventures and Virginia Retirement
System, and three newcomers, including the Canadian pension plan Caisse
De Depot Et Placement Du Quebec and the foundation Wellcome Trust.
The 21-year-old Essex Woodlands, which invests in biotechnology, medical
devices and other types of healthcare companies, did not create an
offering memoranda for the seventh fund. It relied on existing limited
partners to supply 90% of its capital, with the remainder coming from
new investors.
The vehicle attracted more capital than it could oblige and the firm had
to trim its LPs' allocation requests in order to accomodate both new and
existing investors, said Managing Director Immanuel Thangaraj. Essex
Woodlands' seventh fund is significantly larger than the $400 million
vehicle it launched in early 2004. The beefed-up size reflects Essex
Woodland's expanded focus on growth equity investing, which tends to
consume more capital. The firm started to conduct these types of deals
in Fund VI.
The seventh fund will devote roughly half of its capital to early-stage
venture capital deals and the remaining half to late-stage deals,
including growth equity and private investments in public equities,
Thangaraj said.
The focus on growth equity investments and PIPEs is becoming
increasingly common among larger life sciences-oriented funds like
Aisling Capital, Clarus Ventures, Domain Associates, MPM Capital and
others.
The sixth fund is almost fully deployed, with only enough capital to
conduct one or two more deals. The vehicle posted a total value multiple
of 0.91 as of September 2005, according to Oregon State Treasury. It was
too young to post an internal rate of return as of that date.
Another reason Essex Woodlands raised a bigger fund this time around was
that it wanted to stock its coffers with enough capital to last three to
four years. The firm put its sixth fund to work within just two years,
much quicker than anticipated, so it wanted to avoid having to come to
market again in so short amount of time.
"We were back in the market sooner than most people expected," Thangaraj
said. "So we'd like to have three to four years now." Thangaraj said the
firm invested Fund VI at a rapid clip because it conducted more growth
equity deals. At the same time, it led roughly 80% of the deals it
participated in, thereby increasing the amount of capital it put to work
in each transaction.
In addition to Thangaraj, the seventh fund will be overseen by managing
directors James Currie, Jeff Himawan, Mark Pacala, Martin Sutter and
Petri Vainio.
However, Managing Director Douglas Eplett is resigning from the firm and
will not participate in the vehicle. Eplett joined Essex Woodlands in
2000 and helped oversee its fifth and sixth funds. Eplett's plans could
not be learned. Meanwhile, Cynthia Doerr, Gilbert Gonzales and Frank
Young will be promoted to partners.
In order to facilitate more growth equity deals, Essex Woodlands is
setting up a new office in New York and shuttering its existing outpost
in Chicago. Managing directors Currie and Pacala, and partners Gonzalez
and Young will staff Essex Woodlands' New York branch. The firm's other
offices are in London, Palo Alto and The Woodlands, Texas.
Reprinted from
www.venturewire.com
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