FARMINGTON HILLS, Mich. – Investment bank GMA Capital in early February held a $50 million first close on its inaugural domestic venture fund, InvestCare Partners, which plans to take advantage of the underserved Midwest health-care sector.
The vehicle will make late-stage equity investments nationwide in small- and medium-size health-care services, infomedic and medical device companies with a minimum of $5 million in revenue and profitability “within grasp,” said Managing Partner Charles Rothstein. Medical-related information technology and outsourcing services also will provide ample deal flow, he added.
The vehicle has no predetermined amount of capital slated for Michigan-based deals, but its managing partners believe that the state – and the Midwest in general – will provide a number of attractive opportunities because of the lack of venture capital available for investment in the region.
“We’re out there singing the praises of why people should be investing in Michigan,” Mr. Rothstein said.
GMA Capital, an 11-year-old investment bank, helps small- and medium-size companies with acquisitions, joint ventures and strategic consulting. The bank, which manages two $100 million VC vehicles in Europe, Global Rights Fund and Venture Capital Trust, works with businesses from a broad spectrum of industries, including automotive, health care, recycling and services.
The new venture fund focuses on health care because “the market dynamics are particularly good,” said Malcolm Moss, a managing partner of the fund, referring to the nation’s aging Baby Boomers.
Limited partners in InvestCare’s first close were Michigan-based hospitals and health-care organizations, including Oakwood Healthcare Inc., as well as some individual investors. The company decided to invest in the fund as a way to consolidate its direct investment program under one vehicle and plans to lend its expertise to InvestCare’s managers.
“There’s a tremendous base of knowledge locally that a lot of emerging technologies and services will come out of,” said Ben Carter, an executive vice president of Oakwood Healthcare and president of the company’s for-profit subsidiary Oakwood Enterprises. “We felt [InvestCare] provided a better vehicle to make [investment] decisions.”
The firm hopes to have a $100 million final close by the end of April, which will include nationwide institutional investors, primarily Midwestern limiteds. Individuals will commit about 10% of the fund’s final total, and the general partnership will invest 1%.
InvestCare’s managing partners include Messrs. Rothstein and Moss, as well as David Eberly, Rajesh Kothari and Leslie Shipley.