HBM Healthcare plans to invest in private companies again

HBM Healthcare Investments can look back at a successful financial year 2012/2013, which closed with a profit of CHF 67 million. HBM has experienced good operational growth at several of its holdings for some time, and after a certain delay this is now being reflected in rising valuations, and thus also in the result. Net asset value (NAV) per share rose by 13 percent to CHF 68.35 during the reporting period, while the share price climbed by 24 percent to CHF 51.35. The HBM portfolio generated a positive net contribution of CHF 78 million to the Company's overall result during the year just ended.

In its press release concerning the financial year 2012 / 2013 HBM announces new investments in private companies: “It has emerged in talks with our shareholders that the great majority support these measures, although they very much expect that we will invest a portion of disposable liquidity, in accordance with the Investment Guidelines, in new private companies which are a good fit with the existing portfolio. The Board of Directors has therefore decided that, irrespective of the level of any discount between the share price and NAV, HBM Healthcare Investments will once again invest in selected private companies that do not form part of the present portfolio. The focus will no longer be on venture capital financing, but rather on strongly growing companies with predictable business development.”

HBM Healthcare Investments has a solid financial foundation, with no borrowed capital, and cash and cash equivalents of CHF 52 million. The many trade sales and IPOs among our holdings have increased the proportion of our investments accounted for by exchange-traded companies to 46 percent. By contrast, the proportion of direct investments in privately held companies has declined to 25 percent. Future trade sales and IPOs will further reduce the proportion of holdings in private companies. However, HBM Healthcare's Investments strategy foresees that the majority of capital is to be invested in private companies. Steps must therefore be taken to restock the private company share of the portfolio.

The prospects for the healthcare sector remain good, and share prices have risen – sometimes sharply – over the past twelve months. Meanwhile, private companies continue to offer interesting investment opportunities at attractive valuations. With its sound balance sheet structure and financial strength, HBM Healthcare Investments has the necessary flexibility to undertake further investments in companies which already form part of our portfolio, as well as first-time investments in new holdings.