KKR Creates Medical-Device Platform Ajax as Part of Growth Deals

(Bloomberg) -- KKR & Co. created a medical-device investing platform called Ajax Health as part of its growth-equity approach to health-care dealmaking.

Ajax, formed by KKR with life-sciences private equity firm Aisling Capital, will fund and help operate emerging medical-device companies, KKR plans to announce Tuesday. Led by industry veteran Duke Rohlen, Ajax is also slated to report a $45 million equity investment in Advanced Cardiac Therapeutics Inc., its first portfolio company.

Along with striking big-ticket health deals through its main private equity fund, New York-based KKR has been building out its health-care holdings with investments in early stage companies. The strategy, originally tested with deals funded through the balance sheet, became formalized in the KKR Health Care Strategic Growth Fund, which is seeking as much as $800 million, people familiar with the matter said in September.

The pool has collected total commitments of $598.6 million, according to a fund SEC filing April 11.

A KKR spokeswoman declined to comment on the fund.

Growth investing has emerged as a way for larger firms to tap into industry networks at earlier stages and expand their contacts while making relatively small investments. KKR, which has also invested in early stage technology firms, sees a lack of funding for growing health-care companies, according to Jim Momtazee, head of the buyout firm's health-care team in the Americas.

The plan is to bridge the gap between venture capital and late-stage funding.

“In very early stage venture you do have some activity in life sciences, and at maturity you have a well functioning market, but getting from company formation to scale -- that's where we didn't see adequate capital sources,” Momtazee said in a phone interview. “Being in nearly the full continuum of health-care investing allows us to build out our intellectual capital in the industry.”

Ajax is the ninth health-related growth investment for KKR. The New York-based firm has committed capital to companies including insomnia-device maker Cereve Inc. and Slayback Pharma LLC, a pharmaceutical research and development company.

KKR's growth strategy focuses on three main facets of health care: diversified pools of clinical-stage opportunities across biopharmaceuticals, medical devices or diagnostics; products post-FDA approval that need capital for expansion plans; and service-oriented businesses.

To contact the reporter on this story: Melissa Mittelman in New York at mmittelman@bloomberg.net.

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Michael Hytha, Elizabeth Wollman