Frazier Healthcare Partners raises $1.4B fund, one of the largest in Washington state history

Nader Naini, managing partner at Frazier. (Frazier Photo)

New fund: Seattle-based Frazier Healthcare Partners raised $1.4 billion for its tenth Healthcare Growth Buyout Fund. It’s a big jump from the 30-year-old firm’s most recent $780 million fund and is one of the largest institutional funds raised in Washington state.

Fund details: The cash will be used to invest $50-to-$150 million in 10-to-12 middle-market healthcare companies with EBITDA of $10-to-$70 million. Frazier is focused on healthcare-related opportunities in pharmaceutical services, hospital outsourcing, and data analytics/AI.

Frazier’s strategy: The firm leverages its network to find successful healthcare executives and matches them with potential investment targets, either to take over as CEO after a deal is completed or to serve as chairman.

“There’s massive consolidation going on in the healthcare industry in different market segments,” said Nader Naini, managing partner at Frazier. “You’re moving into a more high volume, lower margin industry that ultimately is going to deploy a lot of capital spent for healthcare into more appropriate and clinically beneficial patient care.”

There has been a rush of venture capital going to healthtech companies amid the pandemic. Frazier invests in more mature companies out of the healthcare buyout fund, but Naini — who sits on the board of Seattle telemedicine startup 98point6 — said he’s paying attention to the startup trends as well.

“We have provider-based businesses, and in each of those virtual healthcare has become a major component,” he noted.

Investors: The fund took about five months to raise. A majority of the cash came from existing fund investors. A handful of new endowments, foundations, pension funds, and others also invested. About 65% of the fund’s investors are from the U.S.; 25% from Europe; and 10% from Asia and the Middle East.

Frazier, which also runs a separate Life Sciences fund, has raised $6.2 billion over the past three decades and invested in more than 200 companies.

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