Chinese venture capital (VC) firm Addor Capital announced on Tuesday the completion of its second health industry investment fund at 1.557 billion yuan ($240.8 million) to step up investments in emerging innovative drug developers in the country.
Addor said that the final closing of the new fund happened only two months after it had started the fundraising work. Limited partners (LPs) in this vehicle include government-guided funds, state-owned asset managers, high-net-worth individuals (HNWIs), as well as other healthcare-focused investors.
Addor’s management team including founding partner Shi Zhongyun and Xue Yi, a partner who specialises in health, biomedicine, and manufacturing-related deals, also put their own money into the new fund.
With Fund II, Addor plans to focus on emerging, tech-powered startups, especially on companies developing first-in-class medicines.
“Our Fund I has deployed a relatively smaller proportion of capital to innovative drugmakers because those companies tend to have a longer R&D period and generally require more capital, yet it used to be difficult to exit from such investments,” said Xue in a company statement.
However, he added, China’s continued reforms of its capital market, including the launch of the STAR Market in July 2019, have opened up a new financing channel for pre-profit drug makers. These reformed stock exchanges also offer “an efficient path to exit” for investors.
“In last two years, we’ve also seen a growing number of pharmaceutical talents coming back home from overseas. They have provided solid technical support to China’s innovative drug industry,” said Xue. “We believe the domestic market will usher in a golden development era with the support of policies, talents, and capital.”
In May 2015, Addor’s debut health industry investment fund was closed with a corpus of 1 billion yuan. The predecessor fund, which invests in segments like digital diagnosis and treatment, has by far poured money into 28 tech-enabled small and medium-sized enterprises, with co-investments from third-party institutions amounting to over 2 billion yuan.
Addor’s maiden health fund had started investing with a focus on two sectors, namely developers of innovative medicines and high-end active pharmaceutical ingredients (APIs), as well as in vitro diagnostics (IVDs) players, before it expanded into the areas of medical services and high-end medical instruments.
The firm said that it had led 95% of the deals in which Fund I participated. Among the fund’s portfolio companies, medical instruments manufacturer Contec Medical Systems went public in August 2020 as one of the first batch of 18 firms to sell shares on the reformed tech-focused ChiNext board in Shenzhen.
Sansure Biotech, an in vitro diagnostic solution provider also backed by the Fund I, raised nearly 2.02 billion yuan in an initial public offering (IPO) on China’s Nasdaq-style STAR Market in the same month.
Headquartered in eastern China’s Nanjing City, Addor invests in early- to growth-stage startups in the health sector, as well as industries like clean technology, new materials, advanced manufacturing, consumer services, culture, and technology, media, and TMT.
As of January 2021, the firm recorded about 113.7 billion yuan ($17.6 billion) in total assets under management (AUM). It has backed 957 startups, 205 of which are listed on stock exchanges at home and abroad.