MTS Health Investors has closed its fourth fund, MTS Health Investors IV, on its $365 million hard cap, according to Oliver Moses, a senior managing director at the firm.
The fund, which was oversubscribed, had an initial target of $300 million and held a first close on $155 million with money from existing investors in February.
The firm began talking to existing investors toward the end of 2015 and formally launched marketing in the first quarter of this year. Re-ups represent roughly half of the fund, while new investors include a mix of university endowments, foundations, family offices, funds of funds and a number of large US health insurers.
The new fund is almost double the size of its predecessor, MTS Health Investors III, which closed in 2013 on $188 million.
MTS Health Investors focuses on investing in profitable healthcare services companies in large, growing and fragmented segments of the industry that are poised for consolidation. It targets US companies with valuations between $25 million and $300 million.
The firm's portfolio includes mynexus, which focuses on reducing waste in the care management sector.
Although the investment strategy will remain similar, MTS will be less reliant on co-investments due to the larger size of the latest fund. “In Fund III, we were frequently dependent on co-investments because our fund size was not large enough to satisfy the needs of many of our investments,” said Moses. “There will still be opportunities for co-investors in Fund IV, but we hope to spend less time securing co-investments and more time focusing on finding attractive portfolio opportunities.”
MTS has not yet began investing out of the fund but currently has two deals in the pipeline, according to Moses.
The team is led by Moses and Curtis Lane, also a senior managing director, and Alex Buzik, a managing director.
MTS, which is based in New York, has $700 million in assets under management.
Placement agency Probitas Partners, which helped with Fund II at the tail end of fundraising, worked on fundraising for Fund IV.