Power Corp. of Canada’s alternative-investment arm has raised more than half a billion dollars for its new fund focused on royalties from health-care innovations.
Sagard Healthcare Royalty Partners announced Thursday that investors had committed US$475-million (C$616-million). The capital commitment includes US$75-million from the billionaire Desmarais family’s Sagard Holdings, the fund’s parent.
The fund has made one public investment since it was announced a year ago. In April, it paid Newcastle University US$31-million for a portion of royalty interest from the cancer drug Rubraca. The drug slows the progression of certain cancers, including ovarian cancer, and is approved for use in Europe and the United States.
Power Corp. is in the midst of a historical shakeup, as Paul Desmarais Jr. and André Desmarais announced last month that they would step down as co-chief executives to become chair and deputy chair, respectively. The company is also restructuring and consolidating ownership of Power’s financial-services operating companies, including Great-West Lifeco Inc. and IGM Financial Inc., removing Power Financial Corp. from the Toronto Stock Exchange.
The new health-care-royalty fund, which generates returns by investing in payouts from commercialized pharmaceuticals and medical devices, was announced last year as Sagard Holdings was diversifying its assets under management, adding a $200-million financial-tech venture fund and a US$450-million credit fund. Sagard Holdings chair Paul Desmarais III told The Globe and Mail last year that the alternative-asset manager was interested in health-care royalties because they’re uncorrelated with traditional markets.
Sagard Healthcare Royalty Partners is headed by pharmaceutical veteran David MacNaughtan, who previously oversaw the Canada Pension Plan Investment Board’s pharmaceutical intellectual-property investments.
“With the first close, we can focus on sourcing, origination and investing,” Mr. MacNaughtan said in an interview. He said he expected the fund to eventually hold 10 to 12 royalty streams.
Sagard said the fund was open to further commitments through 2020.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.