Quadria Capital, a healthcare-focused investor, has started distributing the gains from its 10-year-old first fund, along with the principal, to its limited partners or investors. The process is anticipated to conclude by 2023-end.
“We are in the process of returning the fund completely. There are two assets that are left… We intend to have completed the exit of the fund by the end of this calendar year. And currently, the fund is tracking in NAV closer to 2.9x cash-on-cash (in US dollars),” Amit Varma, managing partner, Quadria Capital, said in an interview. NAV stands for net asset value.
Quadria Capital’s inaugural fund’s target corpus was $300 million, although it eventually invested $450 million, including co-investments.
Varma, however, did not name the assets that Fund 1 is yet to exit from. The portfolio included Concord Biotech, which went public in August, with Quadria selling its 20% stake. Similarly, it exited 30% in AIG Hospitals last year, an investment made from both Fund 1 and Fund 2.
Quadria Capital raised $600 million in 2016 for its second fund, and eventually deployed $750 million including limited partner co-investments. “We just completed deployment (of Fund 2) in 2022; so, it’s a very early fund. But we’ve already delivered some DPI when we exited AIG, which we were invested in from Fund 1 and Fund 2. Our NAV for Fund 2 is sitting on 1.8x cash on cash (in US dollars),” he added.
DPI, which stands for distribution to paid-in capital, is the measure of capital returned to investors from a fund against the amount invested.
Currently, Quadria Capital is in the process of raising its third fund for which it expects to raise $800 million to $1 billion. “Our cover is $800 million. We expect to announce the first close of the fund next month, around our annual general meeting ,” Varma said.
The first close allows the fund to begin its investment activities even as it continues to raise additional capital. Quadria expects to secure 50-60% of its targeted capital with this milestone, Varma said.
The third fund will feature a larger investment range, spanning $100-150 million. It has started its journey by infusing Rs1,300 crore in Maxivision Eye Hospital in July. Quadria backs companies in healthcare services, pharmaceuticals, medical technology and direct-to-consumer businesses.
“Our definition of consumer has changed—anything which is direct to patient, especially post-covid, has become important and very relevant,” Varma said.
He added that the adoption of technology among doctors, hospitals and patients had increased dramatically, which has also sharpened the firm’s focus.
Secondly, the focus has shifted towards reaching customers where they are, he said.
“Tier-II, Tier-III cities is where the markets are. People have realized that healthcare needs to go to the patient; the patient should not be coming to healthcare service providers,” Varma said.
Quadria Capital is also focusing on specializations within the firm across segments, he said. “Whether it is pharma, or services, single speciality, whether it is digital health, we like to be very specialized in what we do. So, our mantra is all about going deep and not spreading ourselves geographically and that we’ve seen has given us good returns,” he said.
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Updated: 27 Aug 2023, 11:03 PM IST