PRINCETON, N.J. – Cardinal Health Partners expected a March 31 first close on its $150 million-targeted CHP II, Partner Lisa Skeete Tatum said.
Although she declined to reveal how much capital the fund had raised to date, the vehicle, launched in early February, has a $200 million cap and already has almost $150 million in commitments from existing limited partners. The firm is now looking for two to three new LPs to round out fund raising.
Skeete Tatum said Cardinal raised its capital so quickly because its fund combines health-care with the Internet and focuses on e-health deals. “While we will continue to invest in traditional businesses, 80% of our portfolio is in the e-health sector,” she said. “We have carved out quite a niche for ourselves in this area and have a pretty substantial portfolio with a very high return potential.”
CHP II will invest in about 20 companies with a typical deal size of $4 million to $7 million over several rounds of financing, she added. The fund has an 80%/20% carried interest split and a standard management fee.
Cardinal focuses on early-stage companies because it feels that is where most value is created, Skeete Tatum said. The speed with which companies go public is one of the reasons CHP II is more than twice the size of its predecessor, the $62 million CHP I. “Even though we are doing early-stage, companies are requiring more money – a first round of financing now might be a total of $10 million to $15 million, where before it was $3 million to $4 million,” she said.
Limited Partners for CHP II include the Robert Wood Johnson Foundation, Nassau Capial Inc., Northwestern University, AIG Global Investors Corp. and Hamilton Lane Advisors Inc., and the firm is targeting endowments, pension funds and insurance companies as new investors.
The company’s previous fund, CHP I is almost completely invested, Skeete Tatum said. She declined to provide an estimate of the fund’s rate of return, but said it should be in the upper quartile. In addition to Skeete Tatum, Cardinal’s partners include John Clarke, Brandon Hull and John Park.