Highland Capital Management Korea Ltd., an affiliate of Dallas-based alternative investment management firm Highland Capital Management, L.P. (Highland), has closed a healthcare-focused private equity fund with $147 million in total capital commitments.
South Korea’s National Pension Service (NPS) is the anchor investor for the fund. Incepted in 1988, it is valued at approximately KRW 565 trillion ($499.8 billion) while the Sovereign Wealth Fund Institute reports their corpus as $465.13 billion.
Investors participating in the Highland fund with NPS Korea have specific objectives within the healthcare space in addition to investment returns. This includes access to opportunities for co-investment in order to serve their strategic objectives in Korea, China and the US.
In Asia, Highland will work with Stonebridge Capital, a Korean private equity and venture capital firm, which will co-manage the fund.
This is Highland Capital Management’s first healthcare-oriented private equity fund in Asia. While Asian investors have shown increased interest in the sector during the past two years, most investments made to date were on a direct basis or via multi-purpose funds.
“The fund’s strategy is well aligned with Highland’s core capabilities, drawing on the firm’s deep expertise in the healthcare sector,” said Carl Moore, managing director and co-head of Highland’s private equity group. “Healthcare is the firm’s largest industry exposure and roughly half of our more than 15-year track record in private equity relates to healthcare companies.”
The primary investment targets of the fund will be middle market healthcare companies in North America and Asia. As at May 2017, Highland reports more than $1.5 billion in healthcare assets under management (AUM) spanning multiple asset classes and fund structures.
Matt Jameson, managing director and co-head of private equity at Highland Capital Management, said, “The healthcare industry in the U.S. faces a number of disruptive forces that acutely affect companies in the middle market.”
He adds, “The demographic ‘graying’ of America and increased access to healthcare services in Asia are driving greater utilisation levels and more complex consumer and government demands on the sector. These factors combined with the evolution to value-based reimbursement models create significant opportunities for healthcare investors.”
In aggregate, Highland Capital has a $15 billion AUM and specialises in credit strategies, such as credit hedge funds, long-only funds and separate accounts, distressed and special situation private equity and collateralised loan obligations (CLOs). Highland also offers alternative investments, including emerging markets, long/short equities and natural resources.