By David G. Barry
Apollo will own a minority stake in life science VC firm.
In an effort to both grow assets under management and broaden their product lines, publicly traded investment firms Blackstone, EQT AB and the Carlyle Group have in recent years all acquired life science-focused venture firms.
So, when another publicly traded investment firm, Apollo Global Management Inc., announced a strategic partnership with another life science-focused venture firm, Sofinnova Partners, there was a desire to mark it as a continuation of this trend, and perhaps ask when such other publicly traded investment firms as KKR, Oaktree Capital and Ares Management Corp. would add their own life science firm.
But as Antoine Papiernik, chairman and managing partner of Sofinnova Partners, tells Markets Group, his firm’s transaction with Apollo was “a different deal.”
For starters, Apollo – which has $532 billion in assets – is not acquiring Sofinnova, which has offices in Paris, London and Milan, Italy. Rather, it is taking a 20% stake and committing to invest €1 billion (US$1.04 billion) in Sofinnova’s vehicles, including future strategies the two firms may co-develop. Sofinnova, which was founded in 1972, has backed more than 500 companies and has €2.5 billion under management.
Perhaps most significantly, rather than being an example of a large private markets firm on a shopping spree, it was instead a transaction that Sofinnova drove.
The firm began two years thinking about “how do we take that next step,” said Papiernik. The answer, the firm realized, was that it needed to get more capital. And so, it began an effort to see who might be interested. The number of entities that were indeed interested in partnering with Sofinnova left the firm “flabbergasted,” he said. They ranged from other private equity firms to corporations.
In pursuing fresh capital, Sofinnova’s management team decided not to sell any of their shares. Rather, the firm’s shares would increase by 20% and Sofinnova’s team would “be completely at the helm and run our business,” Papiernik said. That premise, he said, “got to Apollo.” The earlier deals that saw Blackstone acquire Clarus, EQT add LSP, and Carlyle pick up Abingworth were different in that regard.
Sofinnova began speaking to Apollo about 18 months ago. The firm knew nothing about Apollo other than that it had “an amazing track record.” What surprised them about Apollo is that it was not looking for an acquisition. Rather, it sought, said Papiernik, to partner with and learn from firms in fields where it was not historically strong. Apollo, in fact, did a similar deal in the financial technology sector in 2021, partnering with Motive Partners.
Apollo also is not a stranger to the life sciences sector, having done $5 billion of such transactions.
In a statement, Apollo Co-President Scott Kleinman said the firm sees the healthcare and life sciences industries as a “significant growth area for the firm” and Sofinnova as “a clear partner of choice, with specialized knowledge and a vast industry network that is accretive to our broader investing platform.”
Neil Mehta, a partner and global head of strategy at Apollo, will join Sofinnova’s board when the deal closes in the second half of the year.
Papiernik said the message that Sofinnova got from Apollo was that it “wants to understand what we can do without meddling” and, Sofinnova, he added, can also learn from Apollo. The transaction also gives Sofinnova access to Apollo’s sizable LP base – one that numbers some 1,500. “That was real important,” he said.
Apollo is currently investing from an €472 million fund that it closed last fall. Papiernik said the fact that Apollo will be investing $1 billion into future funds may result in them being slightly larger. But, he said, it is not going to alter the firm’s strategy and approach. Rather, the capital will allow the firm to better prepare for the future and bring on new talent. The firm currently has 60 employees – 17 of whom are partners.
“There was no discrepancy in what we set out to do and what we did,” he said.