US-based Ascent Group has closed on the first deal of the $100 million Ascent Medical Technology Fund II, a private equity vehicle aiming to promote the development of the Middle East medical industry.
The Fund invests in US companies that have cutting-edge products and services. It then requires those companies to use 50 per cent or more of the funds to operate or produce their product or service in the Middle East.
Peggy Farley, one of the General Partners of the Fund, who will be part of a round table discussion at the Middle East Capital Markets 2006 conference in Dubai later in November, explained the importance of the Fund for the long-term development of the Middle East.
“The Fund will play a crucial role in raising the capital needed to enhance the Middle East healthcare sector,” she said.
“In the US, a high proportion of GDP goes towards financing entrepreneurs, physicians, engineers and start-up companies; however, this is not the case in the Middle East. Through the Fund and similar deals, Ascent will be bringing this practice to the region,” she added.
The Fund will provide venture capital in the region, as well as advance medical innovation and tap invention, manufacturing and clinical strengths in the Middle East, which is fast being recognised as one of the leading emerging research markets in the world.
“We will also invest venture capital directly into the Middle East to develop new ideas that arise and create new businesses via the transfer of know-how,” Farley said.
She pointed to the outstanding performance of medical technology investments. Ascent medical technology investments have had an average return on investments (ROI) of 824 per cent year on year, against an average of 100 per cent from traditional equity and capital markets.
While the fund is based in America and is a Delaware Limited Partnership, Ascent Medical Technology Fund II has set up the Ascent Medical Technology Middle East Fund Company, BSC, which is a feeder fund registered in Bahrain. Investors can therefore choose to deal directly with the US-based fund, or the Bahrain fund company.
The fund will have a 10-year life, with Ascent expecting to launch another in tow years.
Recently, Ascent has become the lead investor in a private placement for cutting-edge cardiovascular technology startup, Bioheart, a US based company that is conducting clinical studies in the US and Europe for regulatory approval prior to marketing globally.
Bioheart’s technology aims to change the way congestive heart failure is treated by using a new method of cell engineering. Bioheart will establish a cell engineering and production facility in the Middle East.
Editor’s notes and executive summary:
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.
