Private equity firm Frontier Capital has raised $80.7 million so far for a fund capped at $200 million, according to securities filings.
Frontier, based in Charlotte, North Carolina, started raising money for its Frontier Fund III in October. The firm invests in business services companies — companies that have some role in the growing trend of business outsourcing.
While Frontier doesn’t focus exclusively on investing in health, the firm has taken stakes in companies involved in healthcare IT or clinical research. Portfolio company Inclinix, based in Wilmington, North Carolina, provides clinical trial enrollment software for pharmaceutical, biotechnology and medical device companies. Dallas, Texas-based Viverae, another portfolio company, makes software for corporations to analyze medical and pharmaceutical claims in order to manage and reduce healthcare costs.
Healthcare-related investments that have led to successful exits include Anodyne Health, a Georgia company that provides business intelligence software for healthcare companies. Anodyne was acquired for $22.3 million cash in 2009 by Athena Health (NASDAQ:ATHN).
With Frontier now raising capital for its third fund, the firm is positioning itself for new investments. Targeted companies have annual revenue between $5 million and $25 million, and annual growth rates of more than 20 percent. Frontier also looks for gross margins greater than 35 percent as well as proven profitability.
Frontier says that proceeds from its investments are typically used to fund key growth initiatives, such as sales and marketing, and open new facilities and enhance existing service offerings. The investments can also provide liquidity for shareholders.
