- Independent investment boutique, established in 2010
- Focused on investing in the healthcare space
- Participated in CareRx's C$63.25 million equity financing
What Yorkville Asset Management Inc does:
Yorkville Asset Management Inc is an independent investment boutique, established in 2010, that has always been laser-focused on investing in the healthcare space.
Unlike most institutional investors, the team at Yorkville – led by CEO Hussein Amad and managing director Ralph Desando – saw opportunities then for returns in the highly fragmented Canadian healthcare sector.
Both Amad and Desando, who had a working relationship for about 15 years prior to Yorkville, decided to build a business to cater to ultra-high net worth clients, providing services both in the public and private markets.
The firm holds a number of funds, including a unique Health Care Fund that invests in healthcare-related businesses like long-term care, institutional pharmacy, and other ancillary health care silos.
How is it doing:
In May, Yorkville participated in CareRx Corporation's (TSE:CRRX) C$63.25 million equity financing for its acquisition of Medical Pharmacies Group’s long-term care pharmacy division.
CareRx is one of Canada's leading providers of pharmacy services to seniors living and other congregate care communities. In the acquisition, CareRx gained 18 fulfillment centers that serve around 36,000 residents of long-term care, assisted living, and other congregate care settings across Ontario, Alberta, and British Columbia.
Gross proceeds from the equity financing will be used to partially fund the $70 million cash portion of the purchase price.
Yorkville purchased nearly 2.3 million subscription receipts at the issue price for gross proceeds of about $11.5 million -- which reflects the full exercise of the upsize options granted to each of the underwriters and Yorkville.
In late 2020, Yorkville negotiated and funded a $32 million secured debt facility with investee company Southbridge Health Care LP to help fund the development of five Ontario-based long-term healthcare facilities.
The debt facility will be used as the initial equity to start construction along with an additional $100 million facility from Bank of Montreal. The secured financing includes a five-year term, matching BMO’s terms, and carries an annual interest rate of 8.5% as well as an initial structuring fee payable to Yorkville Private Lending LP and the Yorkville Long Term Health Care Fund.
Yorkville used debt instead of equity in order to protect investor interest and diversify its health care fund’s holdings without impacting ongoing yield. The facility also includes an option to deploy another $50 million or so in future redevelopment projects.
The company also has initiated additional governance measures for the Southbridge Health Care GP board as part of its efforts to protect the interest of investors, reduce structural costs and help the business in its redevelopment process. The enhancements were necessary in light of the current environment and the need for a “significant” financial commitment to fund redevelopment.
An initial amount of $22 million was funded immediately, with subsequent draws upon request. Yorkville’s Health Care Fund can use around $10 million of its currently available cash and another $10 million of its revolving credit line with Scotiabank to fund the initial amount.
What the boss says:
“We are very pleased with the strategy executed by the management team and board at CareRX. Yorkville continues to demonstrate it’s commitment to CareRX and its belief in the necessary consolidation of the institutional pharmacy space," said Ralph Desando, Yorkville's managing director. "We are looking forward to the continued growth and success at CareRX.”
Contact the author: patrick@proactiveinvestors.com
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