Healthcare focused Linden LLC has held a first close on its inaugural fund Linden Capital Partners LP, collecting more than $100 million in LP commitments. Linden, a strategic affiliate of Madison Dearborn Partners, has put a hard cap of $200 million on its fund.
Linden was launched in 2002 by Eric Larson, a managing director who is joined at the firm by Tony Davis (also a managing director) and Brian Miller (a director). The three had previously worked together at First Chicago Equity Capital, which eventually evolved into One Equity Partners and is now the private equity arm of JP Morgan. Bristol Myers Squibb veteran Mary Beth Pieprzyca also joined the firm at its launch as an operating partner.
Linden is one of two mid-market healthcare funds to emerge out of One Equity. Earlier this year Tim Dugan, who for a stint had worked under Larson, left One Equity to form Water Street Capital Management. Water Street is also based in Chicago and is in the process of raising a $300 million healthcare-focused fund.
If limited partners are at all confused by the two groups, they could be excused, as there is significant overlap in the two track records. According to the Web sites, both Linden and Water Street listed investments such as AbilityOne, Lifestream International, Kendro Laboratory Products and Inovision Radiation Measurements as among their past investments.
However, based on the anticipated size of the separate funds, the strategies employed by the two new groups will likely be slightly different. A source close to Linden noted that the firm will probably be targeting smaller investments than Water Street, as its fund has a $200 million cap, as opposed to the $375 million ceiling of the Water Street vehicle.
The source categorized the rivalry between the two firms as “friendly” in nature, and added that both sides clearly have attribution rights on all of the overlapping investments in the two track records.
Linden has logged one acquisition to date. In April, the firm acquired private label oral care product manufacturer Ranir, based in Grand Rapids Michigan. The firm financed the deal through a warehousing agreement with Parish Capital Advisors, which is also an investor in the firm’s fund. A source noted the investors are anticipating an early distribution to investors from the Ranir buyout.
Linden will invest in deals as small as $10 million, but its affiliation with Madison Dearborn allows it to pursue transactions as large as $2 billion. Generally speaking, Linden will handle investments requiring less than $50 million of equity by itself, and link up with Madison Dearborn for deals that exceed that amount.
The relationship with Madison Dearborn is also the result of First Chicago ties. John Canning, Madison Dearborn’s head, served as president at First Chicago’s venture arm during Larson’s stay there.
Kirkland & Ellis is serving as legal counsel for the Linden fund, while Park Hill Group has been tapped as placement agent.
Besides Parish Capital Partners, RCP Advisors and Brown Investment Advisory have made commitments to the debut Linden fund. An anticipated final close for the vehicle is expected in the first quarter of 2006.
Linden declined comment for this story.