In a bullish sign for healthcare, Merrill Lynch & Co. will become the latest new source of industry capital.
Already a powerhouse in healthcare investment banking, Merrill Lynch plans to create a private-equity healthcare fund of about $900 million, according to recent published reports.
A source close to the fund told Modern Healthcare that Merrill Lynch will provide $300 million of the total stake in the fund. Some $100 million will come from the state of Florida's pension fund, invested through Liberty Partners, a private equity fund that specializes in buyouts and other deals involving middle-market and growth companies. The healthcare fund will seek to raise the remaining $500 million from private investors.
Merrill Lynch is the latest of several new capital sources for healthcare. Earlier this year, CapitalSource, a new Washington-based fund, announced it had secured more than $540 million of equity capital commitments to provide financing to small and midsized businesses in a variety of industries, including healthcare.
Separately, a source close to RoundTable Healthcare Partners, Lake Forest, Ill., said the fund had exceeded its $250 million fund-raising target and would begin investing in the next few weeks. Principals with the fund declined to comment, citing federal securities restrictions. RoundTable intends to focus on supply companies.
The company recently was launched by several healthcare notables, including Joseph Mamico, formerly with Cardinal Health and Allegiance Corp.; Lester Knight, a former executive with Cardinal and Baxter International; and Todd Warnock, former managing director at Credit Suisse First Boston Corp.
Financial experts say the flow of private capital into healthcare signals that investors believe the industry is turning around and that healthcare is safer than other areas of the economy.