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Smart money: how Par Equity’s hybrid investment model is delivering better outcomes

Last year was an exciting year for Par Equity. The firm doubled its deployment into high growth tech companies to £25m. It extended its track record of returning cash to investors every year since 2013. And it picked up no less than 6 industry awards.

IFA Magazine spoke with Par Equity Partner Andrew Noble regarding two of those awards, which speak volumes of Par Equity’s hybrid investment model as the Edinburgh-based manager was recognised as ‘EIS Manager of the Year’ by the EIS Association, and ‘Angel Group of the Year’ by the UK Business Angel Association. Noble added, ‘the combination of these two awards reflects the impact we can deliver through our EIS fund together with our Investor Network of more than 200 members’.

So how does this work in practice?

Noble went on to explain, ‘the starting position is to understand the needs of the companies we invest in, which varies at each stage of growth. The requirement for growth capital is obvious, but it’s our job to forecast the funding needs of the business over several rounds of investment, ensuring a smooth growth trajectory and that the right capital is raised at the right time. But high growth companies need much more than the capital to fund that growth. A company’s prospects can be dramatically improved if it has an engaged group of shareholders with industry and technology domain expertise to help solve its most pressing challenges and accelerate its most exciting opportunities.’

Noble continued, ‘the Par EIS Fund provides the scale that we need to lead investment rounds, to write the size of cheque needed to influence the business, and to continue to back that company through successive funding rounds. We are then able to wrap our Investor Network around the EIS Fund’s activity, amplifying our capabilities across all 4 touch points in the investment life cycle – deal origination, due diligence, portfolio management and exit management. We have 10 in our investment team, but we also have a further 34 operating partners on the boards of our portfolio companies.’

By using their network in this way, Par Equity says it can ‘turbo charge’ its investments, and this is demonstrated in the level of returns it has generated for its investors. Par Equity has now backed 68 companies since 2008 and has now realised 24 of those. On a blended basis these exits have returned 3.8x money to investors and a 28% IRR, before any EIS relief. The average holding period of exits is 4.7 years.[1]

Bringing this all to life is one of Par Equity’s latest exits, Current Health, which was acquired by Best Buy Inc. in October 2021 for $400m and is Europe’s second largest digital health exit, ever.

Current Health is an Edinburgh-based healthcare and artificial intelligence technology company that uses predictive analytics and machine learning in conjunction with wearable sensor devices to monitor, in real-time, key vital health signs in patients at risk of deteriorating medical conditions.

Par Equity discovered Current Health in 2014 through the Converge Challenge, a programme which identifies the best spin-outs from Scottish Universities and which Par Equity helps to judge. Par Equity monitored the business for 18 months before investing in 2016 and going on to support the company across a further 6 rounds of investment, including its £31m Series B in April 2021. The Par EIS Fund supported Current Health alongside 99 members of the Par Investor Network.

Throughout the life of Par Equity’s investment in Current Health, the team says it was able to support and influence the business, most notably through three key individuals into the business:

  • Richard Lennox, a former Skyscanner executive and member of Par’s Investor # Network, joined Current Health as its COO in 2019;
  • Robert Higginson, Partner at Par, had a close relationship with CEO and Founder Christopher McCann from the outset and joined the board in 2016. From his US base Robert has provided a constant and broad range of advice and introductions over the years, most notably around the establishment of the company’s US operations.
  • Aidan MacMillan, Senior Investment Manager at Par, worked closely with the business through Series A-B and eventually its exit, leveraging his transaction services experience to help the team structure the rounds and manage the exit process.

John McLean, CFO of Current Health said in February 2021, ‘Par Equity has been a stand-out investor for Current Health, backing the company in each investment round since inception and helping us break into the US. They are a value-add partner and unique in their ability to support the development of medical device companies into the highly regulated healthcare and pharmaceutical sectors.’

[1] Source: Par Fund Management Limited, 31st December 2021. Past performance is not an indication of future performance.


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