Sagard Holdings, the alternative asset manager arm of Power Corporation, has announced the final close of Sagard Healthcare Royalty Partners, LP (SHRP), pulling in $725 million USD.
With a focus on investing in approved and commercialized biopharmaceutical products and diagnostics, SHRP also provides financing for medical devices in the sector.
“SHRP is a key pillar in our portfolio of investment businesses.”
The globally-focused fund also provides financing to commercial-stage biopharmaceutical companies and seeks investment opportunities in assets protected by intellectual property.
SHRP was launched by Sagard in 2019. The $725 million exceeds Sagard’s original target for the fund of $600 million; in its first close SHRP pulled in $475 million.
Sagard did not disclose the limited partners (LPs) in the fund, noting only that it included new LPs as well as strategic anchor investors that participated in the fund’s first close. The fund is headed up by David MacNaughtan, a partner at Sagard.
“In two years, David MacNaughtan and his colleagues have raised $725 million and assembled an enviable group of well-regarded investors,” said Adam Vigna, managing partner and chief investment officer at Sagard. “Royalty monetization is an attractive asset class for Sagard, particularly given the growth of the global pharmaceuticals market and lack of correlation with the broader capital markets. SHRP is a key pillar in our portfolio of investment businesses.”
SHRP acquires royalty streams from companies, research institutes, universities, and inventors that have licensed patents for biopharmaceutical products. It also provides capital to emerging biopharmaceutical companies to help them commercialize products, and in return, SHRP receives a royalty on their direct sales. SHRP expects to make between 10 to 12 investments over the next few years, averaging $75 million per investment, with a range of $25 million to $125 million.
Royalty monetization is when a firm acquires royalty interests in already developed products, in exchange for payments. Through a royalty monetization, an institution is typically able to sell part or all of the future cash flow payments of the royalty contract in exchange for a lump sum or milestone payments.
Royalty payments, generally, are an essential component of most pharmaceutical deals.
“[Royalty monetization] accelerates the returns on healthcare innovation, enabling the reinvestment of the proceeds into new discoveries and development, rather than waiting years for royalties to trickle in,” MacNaughtan said in a statement to BetaKit. “For companies, it is non-dilutive capital with variable repayment terms tied to sales. For not-for-profits, it is a means of transferring the risks associated with a single pharmaceutical product to a financial investor. For investors, it is a way to participate in the top-line of the biopharmaceutical industry without associated R&D risk, in investments that are not correlated with the broader capital markets.”
This type of financing is behind the billionaire dollar success of companies like Royalty Pharma, which went public last year and is owned and operated by Pablo Legorreta, a billionaire in his own right.
In Canada, pharmaceutical firm DRI Capital, controlled by one of the country’s richest families, the Khosrowshahis, operates as a royalty company and is also looking to go public. Last month, DRI Capital hired investment bankers to launch an IPO on the Toronto Stock Exchange for a spinoff fund, DRI Healthcare Trust.
Sagard is itself controlled by the wealthy Canadian family, the Desmarais. The SHRP fund pits two of the country’s most wealthy families against each other.
Sagard is one aspect of the massive organizational structure of the Desmarais family’s Power Corp. The organization spans many types of investment firms and strategies, including venture capital where Sagard operates Portag3 Ventures and various Power organizations hold a major stake in FinTech startup Wealthsimple – part of a broader play to create challengers to the traditional financial institutions in Canada.
In January, Sagard Holdings also launched a new private equity (PE) business, marking its first foray into the PE space in Canada.
SHRP represents a key pillar in Sagard’s portfolio of investment businesses.
“The current global pandemic certainly highlights the importance and benefits of innovation in the biopharmaceutical industry,” said MacNaughtan. “We are seeing more and more interest in alternative financing solutions for pharmaceutical companies and research institutes and we believe SHRP is now very well placed to take advantage of the opportunities we are seeing.”
UPDATE 18/02/2021: This article has been updated with comment from Sagard.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
