BioWorld International Correspondent
Danish investment rules that kick in during a bear market have thrown an obstacle in the path of Scandinavia's newest life sciences venture capital fund, lengthening the time required to reach its first closing.
The new fund, Copenhagen-based Danske Life Science, is an independent division of Danske Private Equity, the venture capital arm of Danske Bank Group, also of Copenhagen. Its parent organization has committed €40 million to the fund, which has an overall target of raising €150 million for investing in life sciences firms in Denmark, Finland, Norway and Sweden.
It will settle for substantially less at first closing. "We expect to raise between €75 million and €100 million in this round," Danske Life Science partner Leif Helth Jensen told BioWorld International. He describes the current climate as "tough, very tough."
In a bear market, he said, the main Danish institutions and pension funds are required to switch from equities to bonds in order to protect their policyholders, so many traditional funding routes have been closed to Danske Life Science. The fund, therefore, has had to look elsewhere for cash. It has targeted smaller funds, companies and funds of funds.
Jensen said he expects to reach first closing in about two months, but Danske Life Science already is involved in investment activity. "We have signed a term sheet with one company and we are very close to signing with another," he said. Despite the tough funding climate, Jensen remains upbeat about the sector. "We see very high quality in Nordic companies and there are very few funds active at the moment, so valuations are down," he said.
Danske Life Science's main focus is on therapeutics companies, but it also will back diagnostics and medical device firms, Jensen said. He expects the fund to complete between 15 and 25 deals. Denmark and Sweden, the most advanced biotechnology locations in the region, will account for the majority of the spend, but Jensen said he is encouraged by developments in Norway and Finland as well, particularly by investment incentives put in place by the Finnish government.
Three of the fund's four partners have an industry background. Jensen was previously president, CEO and co-founder of cancer therapeutics development firm Cureon A/S, of Copenhagen, and also was a co-founder of one of Denmark's flagship biotechnology firms, NeuroSearch A/S, of Ballerup. Claes Post previously was CEO at Melacure Therapeutics AB, of Uppsala, Sweden, and became chief scientific officer when it merged with Biofactor Therapeutics in 2002. Carsten Schou was previously director of pharmacology at Cureon, and also was a co-founder of Pantheco A/S, of H rsholm, Denmark. Busck Fensvig is a corporate finance specialist and was previously business development manager with Danske Private Equity.