As biotech investment slows following a record-breaking year, the Paris-based Sofinnova Partners has landed a €1B collaboration deal with the US investment heavyweight Apollo to nurture life sciences companies.
Cementing the trend for transatlantic deals between biotech investors, the US asset manager Apollo has entered into a billion-Euro partnership with the European venture capitalist (VC) Sofinnova Partners.
The financial and strategic partnership follows a spate of activity in which other European life science VCs have been snapped up by global giants.
In April, global investor Carlyle took over Abingworth and gained control of €1.9B ($2B) in assets under the management of the UK investment firm. Also, in November last year, Sweden’s EQT absorbed the Dutch VC Life Sciences Partners (LSP), with approximately €2.2B of assets under management, for an upfront payment of €450M.
The latest financial and strategic partnership will see Apollo gain a 20% stake in Europe’s largest VC specializing in the life sciences. In return, Apollo will commit up to €1B into Sofinnova’s investment funds, significantly increasing the value of the latter’s current investment funds of more than €2.5B. The companies together plan to enhance their offer to entrepreneurs and support innovation, which represent a key growth area in the biotech investment field.
Apollo currently dwarfs Sofinnova in its investment capability, with approximately €487B ($513B) of assets under management.
Sofinnova managing partner Henrijette Richter indicated her company had approached Apollo, rather than vice versa.
“We wanted to find someone who could help us grow at the same time as keeping our independence,” she said. “We spoke to several players in parallel but quickly zoomed into Apollo because we were looking for the same thing: a partnership of equals.”
She stressed the importance of Apollo’s investment to Sofinnova’s current and future funds, which are designed to invest in startup and late-stage life sciences companies.
“This will provide us with financial fuel and the ability to accelerate our existing strategy,” she explained. “We will gain access to Apollo’s expansive network, including their limited partner platform, which counts over 1,500 contacts worldwide, including sovereign wealth funds and large pension funds.”
Apollo’s investment platform includes credit, equities, and real estate, as well as networks and expertise in capital markets. Sofinnova hopes to gain from Apollo’s expertise and broader international footprint.
Last year, Sofinnova raised €472M for its Capital X fund, aimed at supporting early-stage life sciences firms, and it also invested seed funding in three Italian gene therapy companies.
Biotech investment faces an uncertain future following a bumper year, with volatile share prices influenced by the perfect storm of an impending energy crisis, war in Europe, economic uncertainty, and the aftershocks of the Covid-19 pandemic. Levels of funding reaching European biotech investors have slowed somewhat since the record €10B seen in 2021 and there has also been decreased investment in private biotech companies in the first quarter of this year.
Nonetheless, European VCs have built up vast financial muscle over the past two years, and are confident they can invest in promising biotech opportunities over the coming months.
Disclosure: Carlyle is the largest shareholder in Inova, Labiotech’s parent company.rnrnCover image via Shutterstock