Healthcare firm CRG deploys $458m YTD – Exclusive

Houston-based healthcare investment firm CRG has seen an increase in its average investment size as increasingly more healthcare companies seek financing.

Healthcare-focused firm CRG has been having an active 2016, having deployed $458 million to new healthcare investments year-to-date, Private Healthcare Investor has learned.

Houston-based CRG, formerly known as Capital Royalty, has made financing commitments totaling $458 million through eight healthcare transactions, according to the firm.

A source familiar with the matter told PHI that 21 percent of the $468 million came from CRG’s second fund, Capital Royalty Partners II, which closed in May 2013 on $805 million, above its $800 million target. The rest came from CRG Partners III, which has so far raised $663 million out of its $1 billion target, according to PEI data.

The firm declined to comment on CRG III and fundraising.

PEI data also indicates that East Riding of Yorkshire County Council Pension Fund is one of the investors in Capital Royalty Partners II, which hired Atlanta-based placement agent Fortress Group as its placement agent.

According to CRG president Nate Hukill, the firm has deployed over $2 billion in financing to both private and public commercial-stage healthcare companies since 2009. That averages to about $286 million of capital deployed per year.

In the past 12 months going back to October 2015, the firm has committed over $650 million, according to Hukill.

CRG focuses on underwriting senior secured loans to invest in companies riding three main healthcare trends: increased emphasis on reducing healthcare costs, growth of personalised medicine, and shifting demographics, such as the aging population and heightened obesity cases.

Specifically within healthcare, CRG targets pharmaceutical, medical device, diagnostic, healthcare services, and healthcare IT companies. Companies in the healthcare investment firm’s current portfolio include endocrinology medical device provider Tandem Diabetes Care, to which CRG provided $80 million in financing, and drug delivery company Corium International, which received $45 million in loan from CRG.

Amid the changing landscape of healthcare driven by those trends, CRG’s average investment size has grown by more than 50 percent for its most recent fund, according to the firm.

CRG managing director Luke Düster said, because demand for long-term growth capital in healthcare has grown, CRG developed a healthcare investment platform that allows the firm to invest up to $300 million per deal. Its minimum investment size is $20 million, according to CRG’s website.

According to the source, an average investment size for the third fund has been about $57 million.

CRG was founded by Charles Tate in 2003 and manages almost $3 billion in assets, across 42 healthcare investments. Prior to launching CRG, Tate was a partner and executive committee member of Hicks, Muse, Tate & Furst for 11 years, and an investment and merchant banker at Morgan Stanley for 19 years.

Outside of its headquarters in Texas, CRG has offices in Colorado and New York.