A new fund is to list on the UK stock exchange and will provide exposure to healthcare royalties for retail and institutional investors.
The HealthCare Royalties Trust is hoping to raise £200 million for an initial portfolio of 10 assets, with cash flows from some of the world’s largest healthcare companies and a diversified set of products covering issues such as infertility, “hard to manage” pain, HIV and vaccines. Healthcare Royalty Management managing partner, Todd Davis, commented: “We estimate that healthcare royalty transactions have grown at a compound annual growth rate of 26% over the last 15 years. We believe this growth can only continue, driven by an increasing acceptance of royalty finance as an alternative source of funding, the growing trend of larger pharmaceutical companies to in-license and further exciting advances in the sector.”
The fund aims to find a net total return of more than 10% annually over the medium term, with a target initial dividend yield of 6% a year. Healthcare Royalties Management chairman, Bryan Morton, said: “This will be the only UK listed investment vehicle to provide pure exposure to this asset class which is not correlated to the broader market; this should be appealing given the current volatility that is being experienced across global markets. We are also delighted that the fund will be managed by the team from Healthcare Royalty Management where the core team together has been investing in the sector for over a decade and manage five private funds with around $3 billion of committed capital.”