TVM restarts fundraising

The healthcare-focused private equity firm will seek a slightly smaller amount and invest in fewer companies.

TVM Capital Healthcare is back in market with its third flagship fund after pausing fundraising last year due to regulatory issues in the healthcare market.

The Dubai-headquartered firm is now seeking $250 million with a $350 million hard-cap for TVM Healthcare III, the firm’s chairman and chief executive Helmut Schuehsler told Private Equity International.

“We had a couple of difficult situations with the regulatory environment for some of our portfolio and decided that collectively as a team we would focus on those situations, and delay fundraising” Schuehsler said. “We had some regulatory changes that needed our attention.”

TVM now plans to invest in 10 deals from Fund III across the Middle East, North Africa and Turkey (MENAT) region, India and south-east Asia, Schuehsler said. The firm’s initial plan last year was to invest in 12 deals and seek $300 million for the fund.

“It’s the same concept – we haven’t changed anything except made the target amount a little less and target slightly fewer deals,” Schuehsler said.

Fundraising for MENAT-focused vehicles can be challenging as international investors at conservative institutions – pension funds, insurance companies – are cautious about investing in the region due to an image of political instability, Schuehsler said. In reality, the markets that make up the Gulf Cooperation Council member states are economically and politically stable, he added.

TVM’s strategy of investing in healthcare in emerging markets is a “niche of a niche” Schuehsler said, and he estimates there may be no more than 100 professional investors globally which have an appetite for such a strategy.

TVM’s previous fund, TVM MENA Healthcare II is a $23.4 million vehcile that was raised as an annex fund to its $50 million 2010-vintage TVM Healthcare MENA I fund. The firm has made one exit from that portfolio, selling United Arab Emirates-based long-term care provider ProVita International Medical Center in June 2015 for $160.6 million.

TVM is preparing to exit a second asset from that portfolio, Schuehsler said.

Investors who backed Fund I include the World Bank’s private sector investment arm International Finance Corporation, Saudi corporate investor Olayan Group and corporate consultant Munich Medical International, according to PEI data.

Across the regions TVM invests in, India is a market that provides exciting opportunities for private healthcare investments, he said.

“I think that the world will at some point start learning from the Indian experience,” he said. While western countries are experiencing healthcare funding issues, India has had to invent business models amid low levels of private insurance in the country, and public hospital services that provide only basic services.

“Healthcare in India has come up with interesting business models that are very cheap, very standardised, cookie-cutter models that can scale very rapidly and appeal to people who cannot afford a $2,000 treatment or a $10,000 treatment – they can maybe afford $150,” Schuehsler said.

TVM has made not made any direct investments in India yet, he said.

TVM Capital Healthcare was established in 2009 and has at least 23 professionals, according to its website.