DRI Capital is nearing its $1 billion target for the firm’s third drug royalties fund, which will likely be oversubscribed, according to a person with knowledge of the firm.
Toronto-based DRI launched Fund III in mid-2012 and had raised close to $850 million by February. The firm invests in royalty streams of pharmaceutical drugs that have been in the market for certain periods of time and are essential to keeping people alive. DRI works to build a diversified portfolio of different royalty streams and can use leverage to monetise a portion of the future royalty payments and distribute the cash to LPs.
Fund III is charging a 1.75 percent management fee on committed capital and an 8 percent preferred return, according to documents from the San Diego County Employees’ Retirement Association, which committed $60 million to the fund last October.
DRI Capital was not immediately available at press time. Atlantic-Pacific Capital is working as global placement agent on the fund.
The firm’s Fund II collected $701 million in 2010. Limited partners in Fund II include the Louisiana State Employees’ Retirement System, the San Diego County Employees’ Retirement Association and the State of Wisconsin Investment Board, according to Private Equity International’s Research and Analytics division.
DRI’s first two funds have 40 royalty payment streams from 27 different patented drugs approved by the US Food and Drug Administration or similar government bodies, according to SDCERA documents.
Canadian private investment firm Inwest Investments took the former Drug Royalty Corporation private in 2002 and turned it into DRI Capital. The firm has approximately $2 billion of assets under management.