MedEquity Backed with $100 Million From Chase, Others
MedEquity Investors LLC, the Wellesley, Mass. firm founded by former TA Associates
Managing Director Robert W. Daly, has $100 million on hand in the form of a pledge fund to
invest in health care-related companies over the next two years.
The capital has been pledged by Chase Capital Partners, New York, General Electric Capital
Commercial Finance, Atlanta, and an undisclosed third investor.
Chase Capital, whose sole limited partner is Chase Manhattan Corp., initially agreed to put up
$50 million of the total pot, or essentially half the capital required for deals identified by
MedEquity (Venture Capital & Health Care, May, page 3). The firm later decided to up that
total to $65 million.
GE Capital has pledged to put up to $35 million, and the third investor up to $10 million.
The three investors also can put more of their own capital into a deal if needed.
MedEquity, according to Mr. Daly, will target investments of $5 million and up, a range that
may be somewhat higher than what would be handled through a conventional $100 million
venture fund. A pledge fund, in which limited partners can elect not to participate in particular
deals, is better suited to handle deals of this size, he said.
MedEquity so far has made one investment, teaming up with Chase Capital to put $15 million
into Medichem Research Inc., a Lemont, Ill. company that synthesizes compounds for use in
pharmaceutical and biotechnological testing (Venture Capital & Health Care, July, page 21).
Three-fourths of the capital that MedEquity will invest is intended for currently profitable
companies. The firm will largely focus on health care service companies, but will consider
health care product companies as well.
Mr. Daly said he and fellow Managing Director Peter R. Gates are particularly interested in
companies providing services to the pharmaceutical industry, such as Medichem. MedEquity,
he said, will also take a strong look at investing in publicly traded companies.
Mr. Daly founded MedEquity after 13 years at TA Associates, where he oversaw health care
service investing. Mr. Gates is a former senior vice president at Concentra Managed Care Inc.
Concentra, which seeks to contain costs associated with auto insurance, was taken private
earlier this year by a group led by Welsh, Carson, Anderson & Stowe Inc., New York (Venture
Capital & Health Care, March, page 19).
Reach Mr. Daly and Mr. Gates at (781) 237-6910.
Venture Capital & Health Care August 1999