FFC uses special purpose vehicle for healthcare deal

Ferrer Freeman & Company created a special purpose vehicle to acquire Arcadia Solutions while it markets its fourth flagship fund.

Healthcare specialist Ferrer Freeman & Company (FFC) has acquired health IT services company Arcadia Solutions, the firm announced in a statement.

Rather than investing with a traditional private equity fund, FFC completed the deal through a special purpose vehicle raised through a syndicate of investors in the firm’s network, according to a source with knowledge of the deal. The firm will likely continue to structure individual deals through special purpose vehicles until it raises its fourth flagship fund, which is expected to close in 2013, the source said.

This is the first time the firm has used this model. FFC typically invests between $15 million and $60 million in equity per transaction, said the source, who added that the Arcadia deal fit well within that range.

FFC has not raised a fund since FFC Partners III, a 2004 vintage that closed on $384 million, according to data provider Private Equity Connect.

Additional information on the firm’s upcoming fourth fund was unavailable. FFC does not appear to have registered the vehicle with the US Securities and Exchange Commission. The firm was unavailable for comment.

Arcadia provides software and IT services to healthcare providers, accountable care organisations and health information exchanges.

“Providers and payors must include physicians in system-wide IT platforms in order to succeed in today’s rapidly evolving healthcare industry,” firm co-founder Carlos Ferrer said in a statement.

FFC’s investment will help spur the company’s development of services and intellectual property, as well as geographic expansion, according to the release. That growth may be fueled by initiatives in President Barack Obama’s healthcare reform act, many of which rely on the healthcare system’s transition to lower-cost IT platforms.

FFC is headquartered in Greenwich, Connecticut and has invested more than $900 million in 36 portfolio companies through its first three institutional funds, according to its website. The firm was founded in 1995 by Carlos Ferrer and David Freeman.