Ex-Visium Team Markets Private-Debt Fund
Madryn Asset Management has resumed fund raising for a private equity-style vehicle that originates loans to healthcare companies.
The firm’s investment team, which previously led Visium Asset Management’s private-debt businesses, closed on an initial $275 million of equity for what was then called the Visium Healthcare Partners fund in August 2015. But they were forced to suspend fund-raising activities last year amid a criminal probe of Visium that led to charges against three staffers and the collapse of the once-$8 billion fund shop.
Visium’s problems prompted the private-debt team, led by Avinash Amin and Peter Faroni, to spin off their business as Madryn. Though the executives weren’t implicated in the probe, the Visium case continued to complicate marketing efforts for the rechristened Madryn Health Partners Fund.
With the case now closed, Madryn has begun reaching out to investors once again with the aim of raising an additional $225 million for its fund. A second and final close is scheduled for the second quarter of 2018.
The fund, which has a term of 10 years, writes loans to small and mid-size healthcare companies to fund research and development. It also can invest in royalty streams and buy equity stakes in the businesses.
Smaller companies “are drivers of innovation and growth but cannot secure sufficient financing from traditional sources,” Madryn noted in marketing materials distributed last month.
Last year the New York firm made three investments totaling $95 million, including loans to companies that specialize in diagnostic tests and medical devices. Those positions are showing an internal rate of return of 13.4%.
The fund, which has a minimum-investment requirement of $10 million, offers limited partners an 8% preferred return. For their part, investors are on the hook for a 1.75% management fee during the investment period, and 1.5% thereafter. They also pay a performance fee equal to 20% of their profits.
Amin and Faroni are joined at Madryn by other Visium alumni including operating partner John Leone and associate Isaiah Einzig. The firm’s chief financial officer is John Ricciardi, who earlier worked with Amin at private equity investor Siguler Guff.