(Bloomberg) -- Healthcare-focused Patient Square Capital, founded by former KKR & Co. dealmaker Jim Momtazee, raised $3.9 billion for its debut fund, surpassing a $3 billion target.

The Menlo Park, California-based firm, launched in 2020, benefited from heightened investor demand for exposure to the health-care sector, driven by demographics and innovation, Momtazee said in an interview.

Healthcare private equity deal making remained strong in 2022, which was likely the second-highest year on record, according to a recent report from consulting firm Bain & Co. Deals in the sector are expected to close between $90 billion and $100 billion, trailing only the $151 billion from 2021, the Bain report shows. 

While Patient Square invests in both buyouts and late-stage opportunities, it expects to make more of these so-called growth-equity investments in the current environment, according to Momtazee.

“The demand for capital has not waned. What has waned is the supply of capital,” Momtazee said. “As long as you have the capital and courage, you can do extremely well.”

Investment plans

Patient Square launched its fundraising in the first quarter of 2021, and held a series of rolling closes, Momtazee said, adding that more than 100 investors across North America, Europe and Asia committed capital.

The team met potential investors in coffee shops or near their houses during the pandemic and different Covid protocols meant they raised less capital from countries that made it harder to enter, Momtazee said. 

The firm has already deployed $1.5 billion across nine investments in areas including development stage therapeutics, commercial-stage pharmaceuticals, medical devices and healthcare providers. The firm could add six to 11 new investments to the fund, Momtazee said. 

Combined with co-investment capital from limited partners, who have so far matched every dollar invested in the fund, the firm could invest more than $1 billion of equity in a “compelling opportunity,” Momtazee said. 

Including co-investments, Patient Square has about $5.9 billion of assets under management.

“We have a lot of dry powder in a moment when the world is kind of deprived of capital, at least for the kind of things we are excited to invest in,” he said. 

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