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In an effort to ramp-up investments in the healthcare sector, The Blackstone Group L.P. BX has agreed to acquire global life sciences investment firm, Clarus. The deal, which is expected to be completed by fourth-quarter 2018, is subject to customary closing conditions.
Clarus, in partnership with various biopharmaceutical companies, primarily funds growth-stage investments. With offices in Boston and San Francisco, and experience of investing in more than 50 companies in biopharmaceutical, medical device and diagnostic sectors, Clarus has raised nearly $2.6 billion since inception.
With the acquisition of Clarus, Blackstone, which already manages alternative asset classes like private equity and real estate, is launching Blackstone Life Sciences Investment Platform. Through this private investment platform, the asset manager will be able to invest across various companies and products within the life sciences sector.
Notably, Blackstone, being the second largest owner of life sciences office space in the world, has already invested more than $19 billion in healthcare and healthcare-related transactions.
The main motive behind this deal is to provide necessary funding to the healthcare industry. While this industry is experiencing extraordinary growth, it lacks proper funds to advance breakthrough healthcare products to the market for addressing medical needs.
The president and chief operating officer of Blackstone, Jon Gray said, “This is a unique moment where rapid advancements in science and technology are creating unprecedented innovation and unparalleled impact on human health. Private capital can play an important role in accelerating the lengthy clinical development process to help bring vital, but underfunded, drugs to market.”
He added, “Building on the foundation of the world-class Clarus team, Blackstone Life Sciences is uniquely suited to provide much needed capital and expertise to this sector.”
The global head of private equity at Blackstone, Joe Baratta stated, “Clarus’ investment model— working in partnership with major biopharmaceutical companies to provide them with necessary capital and operating expertise to expand their development budgets and bring medicines to market— is consistent with our investment philosophy across our various businesses.”
Once the deal is complete, the present managing director of Clarus, Nick Galakatos, who co-founded Clarus in 2005, will head Blackstone Life Sciences.
Notably, Blackstone’s inorganic growth efforts remain impressive. Moreover, the company is expected to benefit from diversified products and revenue mix. Further, its robust fund-raising ability should support profitability.
The company’s shares have gained 12.7% in the past year against 4.8% decline recorded by the industry.
Currently, Blackstone sports a Zacks Rank #1 (Strong Buy).
A few other top-ranked stocks in the same space are Noah Holdings Limited NOAH, Ameriprise Financial, Inc. AMP and SEI Investments Co. SEIC.
In the past 30 days, the Zacks Consensus Estimate for Noah has remained stable for the current year. The company’s share price has increased 7.6% in the past year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ameriprise Financial’s shares have gained 1% in a year. Further, its 2018 earnings estimates have remained stable in the past 30 days. The stock currently has a Zacks Rank #2 (Buy).
SEI Investments also has a Zacks Rank of 2. In the past 30 days, it has witnessed a marginal upward earnings estimate revision for the current year. Its share price has increased 33.1% in the past two years.
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