Investment firm OrbiMed secures $1.86 billion for strategies centered on royalties and credits
In the ever-evolving world of finance, private credit is experiencing significant growth, with projections indicating that it will reach a staggering $2.8 trillion by 2028 [3]. One sector that stands out as a top contender is healthcare, driven by the demand for flexible financing among middle-market firms.
This trend is particularly evident in the success of funds like the OrbiMed Royalty and Credit Opportunities Fund V. This fund, which recently raised $1.86bn [6], is designed to support companies in the healthcare sector that may be struggling due to challenging equity markets, particularly in biotech and life sciences [7]. Over 90% of the fund's capital came from existing limited partners, including medical institutions, university endowments, and family offices [8].
The OrbiMed Royalty and Credit Opportunities Fund V capitalises on challenges facing big players in the healthcare industry. By providing credit and royalty-based financing to healthcare companies across various sectors, such as biopharmaceuticals, medical devices, diagnostics, and tech-enabled services, the fund aims to provide financial support, allowing these companies to grow and thrive despite market volatility [7].
OrbiMed, with 145 professionals globally and offices in the US, UK, and China [9], leverages its deep sector expertise and investment specialization in healthcare and life sciences to identify innovation-driven companies across the healthcare system [2]. The firm's approach typically includes maintaining valuation discipline and risk awareness while focusing on companies positioned as long-term winners less affected by policy uncertainty [2].
Thematic investing in private markets, particularly focused on healthcare, is currently experiencing significant growth and evolving dynamics. A report from BNP Paribas found that allocation to investors deploying thematic strategies has been increasing [10]. Healthcare-themed private equity and credit funds are drawing increased fundraising momentum amid secular tailwinds like AI integration and an aging demographic, despite some recent short-term challenges in healthcare stocks and fundraising environments [1][2][5].
In summary, private credit is expanding rapidly, with healthcare as a top sector. Firms like OrbiMed exploit their healthcare sector expertise to identify structural winners and deploy capital through thematic private credit strategies that balance risk, innovation, and long-term growth potential [1][2]. Customization and scale are key competitive advantages in private credit, enabling firms to provide targeted, flexible financing solutions aligned with healthcare clients’ evolving capital needs [4].
Matthew Rizzo, the fund's general partner, stated that the fund's flexible, non-dilutive capital solutions can help portfolio companies grow and thrive despite volatile market conditions [11]. The success of the OrbiMed Royalty and Credit Opportunities Fund V indicates a growing trend of private credit funds focusing on the healthcare sector to provide much-needed financial support to companies facing market challenges. This could potentially lead to innovative breakthroughs in various sectors.
- The rapid expansion of private credit market presents an opportunity for investment in sectors like health-and-wellness, as demonstrated by the success of the OrbiMed Royalty and Credit Opportunities Fund V, which specialized in healthcare.
- In the realm of finance and investing, funds like OrbiMed are demonstrating the potential of thematic investing in private markets, particularly in health-and-wellness, by offering flexible, non-dilutive capital solutions that support innovation and long-term growth in the healthcare sector.
