Magnetar Capital, which has made billions on its energy and infrastructure bets, is joining others who are seeing green lights flashing in healthcare.

The $13.4 billion hedge fund is seeking to raise $400 million, Bloomberg reported, citing a person familiar. The Evanston, Illinois-based firm is planning to close the fundraising by mid-2020, and focus on established companies in an effort to avoid risks brought by uncertain results of drug trials. 

Tech firms, private equity and venture capital are all investing more in healthcare, boosted by  aging Western populations, advances in gene therapy as well as artificial intelligence and digitization applications. As global spending is expected to reach $6.5 trillion, tech companies from Apple to Google have expanded in healthcare, 

Global private investment in the healthcare industry has reached a record $108 billion this year, a 12% jump from 2018. Artificial intelligence-medical company Babylon Health scored $550 million in series C in August led by Saudi Arabia’s Public Investment Fund, the largest VC deal of the year, according to PitchBook data.  

Magnetar’s team will take 15 to 30 long holdings and 20 to 40 short positions on healthcare stocks including pharmaceuticals, medical devices and healthcare services, Bloomberg reported. 

  • The bullishness extends to Europe and Asia. GHO Capital last month said it raised a more-than-expected $1.1 billion for the largest-ever European healthcare-focused fund. Japan’s Softbank is also planning investments in healthcare startups. 
  • Magnetar has invested in three companies and exited one this year, according to PitchBook. The biggest investment is a $625 million PIPE deal in Houston-based natural gas producer Altus Midstream. It exited oil producer Covey Park Energy, when the Dallas-based company was acquired by Comstock Resources for $2.2 billion in July.
  • Other healthcare fundraisings this year include $2 billion at Woodline partners and $750 million at Avidity Partners, Bloomberg said.