Singapore-headquartered CBC Group has closed its second private credit fund on target at USD 500m, stepping up from USD 300m in the prior vintage.

The fund, R-Bridge Healthcare Fund II, is described by CBC as Asia’s largest healthcare-focused private credit vehicle. It provides non-dilutive financing, backed by royalty and revenue streams, to companies with approved commercial-stage drugs and medical technologies. CBC also runs healthcare-focused private equity and real assets strategies.

“US and European companies are often willing to monetise their Asian royalties because the market chronically undervalues them. Analyst reports usually don’t ascribe value to these streams, as focus remains on the US and Europe,” Michael Keyoung, a senior managing director and head of private credit and royalties at CBC, told AVCJ.

“Our strategy is to provide non-dilutive capital against future income streams that the credit market currently undervalues. In today’s volatile markets, that’s a great alternative to timing a difficult equity raise.”

Fund I had one backer – a Middle East-based sovereign wealth fund. That investor is also serving as anchor LP in Fund II, but it is joined by multiple other investors, such as sovereign wealth funds, corporate pension plans, financial institutions, and family offices from Asia, North America, Europe, and the Middle East.

US regulatory filings indicate the fund was incorporated in 2022, while the fundraising process is said to have begun in 2023. LPs that have disclosed their participation include Orange County Employees Retirement System (OCERS), which committed USD 50m in August 2024.

Keyoung believes the increased fund size and evolving LP base reflect the maturity of the strategy, which launched in 2020. Moreover, the Asia angle differentiates CBC from a US-centric global healthcare royalties market that predominantly invests in its home geography.

Keyoung says the US sees over USD 20bn in annual healthcare financing via private credit and royalties. Yet the opportunity is just as large in key non-US markets such as China, Japan, and Europe. CBC claims to be the only player focused on these geographies.

Sweet spot

The firm has deployed approximately USD 700m to date across 15 companies. Nine of these are in Fund I, which has fully committed its USD 300m corpus and USD 100m in parallel co-investment. Fund II has already put USD 270m to work across six companies, with the balance in co-investment.

The average cheque size remains USD 50m-USD 65m – but Fund II is expected to execute more deals to minimise concentration risk.

Targets tend to be revenue-generating companies on the cusp of profitability that deliver innovative, standard-of-care products with predictable long-term adoption. CBC’s facilities have a five to 10-year tenor, including an early prepayment option that aligns with accelerated growth.

Keyoung claims Fund I has returned nearly its entire corpus, while recording zero write-offs. Investment structures emphasise downside protection, securing positions through seniority in the capital structure and specific contractual covenants to safeguard principal.

The biggest risk in drug development is scientific risk, given that clinical trial success rates are as low as 20%. CBC mitigates this through its point of entry: the firm only provides financing once a drug has been approved, and it spends up to 12 months pre-commitment monitoring real-world adoption criteria – tracking prescriptions, reimbursement, and integration into standard care.

“As a physician with a team of experienced professionals, we can understand the market potential,” Keyoung added. “This allows us to assume commercial risk with good visibility into a drug’s utilisation and patient benefit.”

CBC’s first credit investment – USD 60m in financing for NASDAQ-listed Peratek Pharma – was delayed by COVID-19, coming 11 months after the strategy launched. Its loan was secured against future royalties from Peratek’s Chinese partner, Zai Lab. CBC fully exited in October 2023.

Fund I had a China-centric mandate, coinciding with peak investor enthusiasm for the country’s biotech industry. However, market conditions changed after the 2022 lockdowns amid geopolitical issues and a global valuation crunch. Fund II has a pan-Asian and global focus.

“The second aspect was the substantial deal flow we saw outside of China that we couldn’t pursue under Fund I’s strict mandate. Given our existing expertise and network – from our private equity deal in South Korea to our US portfolio companies – we had the foundation to leverage these opportunities,” Keyoung explained.

Areas of interest

The first Fund II investment, which closed in 2024, was a USD 40m facility for Mirxes, a Singapore-based company that develops microRNA molecules for early cancer detection. It was followed by a commitment of up to USD 50m to Human Investments to expand in China and Korea.

Europe-based biopharma player Santhera is regarded as one of Fund II’s earliest success stories. CBC provided CHF 69m (USD 86m) in financing in June 2024 and an additional CHF 20m last month. The deal is structured so that the fund’s returns are linked to sales from a specific product, not only in Europe but also in the US and Asia.

According to Keyoung, the investment has already achieved a 20% IRR, prompting CBC to acquire another 2% of the relevant global royalties.

Fund I did the first royalty-backed financing in China’s biopharma space, providing USD 40m to Yisheng Biopharmaceutical in 2022. However, CBC is wary of high-risk clinical-stage assets in China, preferring to target approved products in major markets. The firm has limited exposure to the country over the past two years, but it is encouraged by increased liquidity.

“Despite the geopolitical tensions, we remain opportunistic across the entire region. The key differentiation for us is to have that Asian angle but think globally,” Keyoung said.