The Ascent Medical Technology Fund II, LP predicts that its joint venture medical equipment manufacturing unit with Salalah Medical Supplies Manufacturing Co. (SMSMCo), launched earlier this month, could apply for its initial public offering (IPO) within three years.
The US-based company, which launched the US $100 million Ascent Medical Technology Fund II, a private equity vehicle to promote the development of the medical technology industry in the Middle East, in 2005, is already confident of success with its Oman operations.
The medical manufacturing unit will begin operations in early 2008, offering medical professionals in the region and abroad the chance to not only purchase medical equipment at a lower cost, but to also develop the equipment of the future.
“We believe that the OEM facility will be able to IPO in the Middle East regional markets within three years of its establishment. We expect returns to be no less than our 60 per cent IRR standards, likely above,” said Peggy Farley, president and CEO of Ascent Capital Management, the advisor to the Fund.
“If our views on innovation coming into the OEM from regional scientists, engineers and physicians are on target, we see the potential IRR as well into the triple digits,” Farley added.
According to Farley, medical technology investments are noted for their outstanding performance and she expects a similar performance from a future IPO.
Ascent medical technology investments have had an average return on investment of 824 per cent year on year, against an average of 100 per cent from traditional equity and capital markets.
“One of the principal reasons for the high returns, beyond selecting outstanding technologies, is a history of successful IPO’s from the US medical technology sector, which connects with a wave of IPO’s currently being experienced in the Middle East,” she said.
The Ascent/SMSMCo medical manufacturing unit will begin operations in early 2008. Initial products will be guide wires and surgical kits, both of which have broad and deep markets globally.
The Ascent Medical Technology Fund II, L.P. (the Fund) is being established by Ascent Private Equity II LLC to make privately negotiated investments in seed, early and mezzanine stage growth companies principally in the medical device industry and, to a lesser extent, in other medical technology industries.
To diversify access to scientific innovation, enhance the profitability of investments, and streamline proof of clinical efficacy, the Fund will be involving certain emerging markets in growing the companies in which the Fund invests.
All Fund investments will avail themselves of opportunities that exist in selected emerging economies for clinical research, manufacturing, and intellectual property. This objective will be achieved either by (1) investing in US companies which will in turn invest in joint ventures or wholly owned subsidiaries located in developing countries; or, (2) by establishing businesses directly in emerging markets.
The Fund is seeking to raise aggregate capital commitments of $100 million. The minimum commitment is $1 million for individual investors and $5 million for institutional investors. A first closing will take place when the Fund has raised a minimum of $30 million of aggregate commitments.
Fund II is a Delaware Limited Partnership. The General Partner, a Delaware Limited Liability Company, has established in Bahrain a Feeder Fund Company that is a Limited Partner of the Fund. The Bahrain Company is for those non-US investors who do not wish to invest directly into the US Fund.
The Principals of the General Partner managed Ascent Medical Technology Fund, L.P. ("Fund I") and Ascent Private Equity, LLC, established, respectively in 2000 and 1999. The advisor to the Fund, Ascent Capital Management Inc., is a US Securities and Exchange Commission Registered Investment Advisory firm. Fund I is more than 75 per cent invested, thus, enabling the principals of the General Partner to develop the Fund. Fund I has seen two harvests. The ROI is in excess of 240 per cent. All of Fund I’s other investments are operating; many have seen tremendous success since the time Fund I invested in them.
