Health care-focused private equity firm Patient Square Capital has closed its inaugural fund with $3.9 billion in capital.
The firm boasts that this is the largest fund ever raised by a health care-focused PE firm. KKR vet Jim Momtazee is serving as the firm’s managing partner.
Patient Square Capital began investing in June 2021 and has already deployed about $3 billion in equity capital. Two of its early investments touch on behavioral health.
Patient Square’s portfolio companies include substance use disorder treatment provider Summit BHC and acute care provider Access TeleCare. In addition to acute care, Access TeleCare has been expanding its behavioral health offering after acquiring Forefront Telecare.
“We are thrilled to have strong support from wonderful partners around the globe. We feel fortunate, especially in light of such a challenging fundraising environment,” Jake Cabala, partner and head of fund partnerships at Patient Square, said in a press release. “Our approach to creating value and serving patients really seemed to resonate.”
Patient Square’s investments include development-stage therapeutics, commercial-stage pharmaceuticals, medical devices, diagnostics and life science tools. The firm also plans to use the new fund to invest in providers.
Over the last few years, the behavioral health space has caught plenty of private equity attention.
In the first three quarters of 2022, there were a total of 151 behavioral health transactions, according to data from The Braff Group. Although deals were down slightly from 2021’s banner year, they are still outpacing pre-pandemic levels.
One of the most active PE firms in behavioral health is Momtazee’s former firm, KKR.
The firm invested in pediatric behavioral health startup Brightline, and it acquired practice management and electronic health record software platform Therapy Brands. It also formed behavioral health companies BlueSprig, which addresses the unmet clinical needs of children with autism, and hybrid mental health provider Geode Health.
KKR is also a PE backer of BrightSpring Health Services.
“Earlier in my career, mentors of mine would advise that the work starts when a transaction closes. Never has that felt more apt than right now with our fund closing,” Momtazee said in a statement. “We have a tremendous amount of work in front of us, but without those that committed to our fund, there would not have been a beginning. We have deep gratitude for the opportunity and are working hard to reward that trust.”
Patient Square Capital did not respond to an interview request from Behavioral Health Business.
Private equity in 2023
The first half of 2022 saw a continuation of 2021’s record-setting pace for health care private equity deal volume and deal value, according to a recent report from Bain & Company.
That pace slowed in Q3 and Q4, largely due to geopolitical uncertainty, inflation, interest-rate pressure and other factors. Nonetheless, it was still a banner year – with action likely to carry over into 2023.
“HCPE (health care private equity) investors face greater competition for assets, higher interest rates from several central banks, tighter credit, labor shortages, and rising labor rates,” Bain noted. “But ample dry powder and a track record of returns ensured a strong year for HCPE investing that continues to attract health care-specific funds, and we expect this trend to continue in 2023.”
Companies featured in this article:
