Oaktree Capital Management has raised more than $2.3 billion for its first private credit fund dedicated to life sciences companies, according to a statement seen by Bloomberg.
(Bloomberg) — Oaktree Capital Management has raised more than $2.3 billion for its first private credit fund dedicated to life sciences companies, according to a statement seen by Bloomberg.
The Oaktree Life Sciences Lending Fund will lend directly to biopharmaceutical and medical device companies across the globe, focusing on firms that have strong intellectual property or late-stage assets targeting difficult-to-treat medical conditions.
Oaktree seeks to provide non-dilutive financing to companies in the sector that typically raise capital through the equity markets to support their capital-intensive needs, said Aman Kumar, co-portfolio manager of life sciences lending at Oaktree. Non-dilutive financing, which takes the form of structured debt and other financing structures like royalties, provides cash to a growing business while also preserving the ownership of the existing equity holders.
“There are a couple of key changes starting to shift the demand to non-dilutive financing,” Kumar said. “A decade ago, 70% of innovations in the life sciences space was done in large-cap companies. Now 70% is coming from small to mid-cap companies that can’t access the broadly syndicated market and previously primarily relied on raising equity.”
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The fund has already committed roughly 40% of the capital in the fund across 16 deals, 95% of which were to businesses not already backed by private equity firms. A representative declined to comment on which companies the fund backed. The fund’s maximum loan-to-value at origination will not exceed 25% and average investment sizes will fall in the range of $75 million to $200 million, according to Kumar.
Oaktree’s dedicated life sciences team, which has 11 people across New York, Los Angeles and London, has committed more than $4 billion over the past decade, including $250 million to Seres Therapeutics Inc. and $50 million to Oxford Biomedica Plc.
The company has $172 billion in assets under management as of March 31, 2023, approximately $24 billion of which is in its private credit platform, according to the statement.
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