2023 is officially underway and dealmakers are not hesitating to begin the groundwork for M&A in the new year. Deal professionals will find ways to create value within their portfolios and some firms are diversifying in ways that adds greater resources and leverage to the firm.

Catalio Capital Management, a life sciences investor, has launched a dedicated public equities hedge fund investment strategy concentrated on identifying compelling life science investment opportunities. In conjunction with the launch of the strategy, the investment team with HealthCor Management, a healthcare hedge fund, will join Catalio to build out the strategy. The strategy is targeting global healthcare and life science equity securities that have shown growth trajectory while being mispriced.

George Petrocheilos and Jacob Vogelstein, co-founders and managing partners of Catalio tell Mergers & Acquisitions, “By launching this strategy, we will have greater resources to leverage information flow, further leverage our deep network of leading scientists and entrepreneurs we’ve successfully engaged in our private equity and credit businesses, and enhance our ability to interpret and evaluate the science that underlies many biotech and medtech firms.”

The firm views the launch of the strategy as a way to equip itself with greater resources. Catalio is looking to capitalize on the current market dislocation and build a scalable portfolio of both long and short positions. Catalio explains that the firm is committed to investing in firms that are bringing breakthrough biomedical technologies to market.

“We are launching this public equities strategy to capitalize on what we believe is a critical juncture in biotech and life sciences,” say Petrocheilos and Vogelstein. “This strategy enables us to support breakthrough innovation while capitalizing on this once-in-a-generation market dislocation we are seeing. Looking ahead, a more robust public equities strategy will offer our investors and portfolio companies access to a full suite of solutions to capture the tremendous value inherent in life sciences and biotech.”

In conjunction with Mergers and Acquisition‘s 2023 M&A Outlook Survey, Catalio’s investment thesis may be on to something here. Bhavan Suri, managing director of technology at William Blair says, “While public valuations have declined dramatically, private valuations are still coming down. I believe that as private valuations tend to be more in line with public valuations and as interest rates peak (coupled with inflationary concern abating somewhat), both sponsors and strategic buyers will have more confidence and we will witness a commensurate pickup in M&A activity.”

Catalios new public equity launch combined with its new relationship with market players HealthCor will help the firm effectively identify firms that align best outcomes in the clinic with best outcomes in the market.

What kind of opportunities are you seeing in health tech and bio sciences.? Let me know your thoughts at [email protected]

Cole Lipsky