Houston-Based Healthcare Investor Capital Royalty Closes $805M Fund

5/2/13Follow @MichaelXBD

Capital Royalty, a private equity investment firm that specializes in investing in healthcare technologies, has closed an $805 million investment fund, the firm announced today. Capital Royalty is headquartered in Houston and has offices in Boulder, CO, and New York City.

The fund, Capital Royalty Partners II L.P, is the firm’s second, according to a release. When debt financing facilities available to the fund are factored in, Capital Royalty will have more than $1 billion in investible capital available through the fund.

Capital Royalty works with healthcare companies, research institutions, and inventors. The firm’s investment emphasis is on structured financings of commercialized biopharmaceutical products and medical technologies that have received regulatory approval. Capital Royalty’s investments are credit oriented and utilize secured debt, royalty bonds, revenue interests, and traditional royalty monetizations. Its investments typically are in the $20 million to $200 million range.

While the round just closed, Capital Royalty has already been using it for investments, according to its website. The largest investment has been a term loan facility for TriVascular, a privately owned medical device company that is developing novel endovascular aortic repair (EVAR) stent graft systems. TriVascular’s device received FDA approval in 2012 for the treatment of abdominal aortic aneurysms. In addition to the loan, TriVascular has raised $60 million in VC from a syndicate that includes New Enterprise Associates.

Capital Royalty also this year agreed to a $30 million term loan facility with Tandem Diabetes Care. Tandem makes and sells an FDA-approved insulin pump. Tandem can get an additional $15 million from Capital Royalty if it meets revenue goals.

“The fund is off to an excellent start, having already made several investments that are producing cash distributions for our limited partners,” managing director Nathan Hukill said in the release.

Capital Royalty’s round was oversubscribed. In total, the firm has $1.3 billion under management and has made 50 deals since its 2003 founding. The deals represent $4 billion, according to the company.

Michael Davidson is the editor of Xconomy Boulder/Denver. He covers startups, venture capital, clean tech, energy, aerospace, telecoms, and whatever else happens above 5,280 feet. Contact him at mdavidson@xconomy.com. Follow @MichaelXBD

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  • Earl Finnegan

    It’s looks bad to lose this much money on healthcare investing, but I’d still say it’s a good form of investment.