US private equity firm Apollo Global Management is set to commit up to €1 billion (about $1.04 billion) to European VC Sofinnova Partners in a bid to boost its life sciences exposure.

Under the agreement, Apollo will take a minority stake in the Paris-based firm on top of its commitment to Sofinnova's funds, including any future vehicles the two may codevelop. The deal mirrors the Apollo's partnership in July with fintech investor Motive Partners, in which it acquired a 24.9% holding in exchange for becoming an LP in the latter's funds.

Apollo's life sciences bet is the latest example of PE making inroads into the sector. Last month, The Carlyle Group agreed to buy UK-based investor Abingworth to grow its healthcare franchise. In November, Sweden's EQT inked a deal to acquire Life Sciences Partners in a deal worth €450 million.

"COVID has accelerated the understanding that healthcare, and investing in healthcare, is a huge opportunity as well as being critical for our collective future," said Sofinnova managing partner and chairman Antoine Papiernik. "Large private equity players have taken notice. And some of them have realized that this is not an area in which they can simply invest a percentage of their AUM; it requires specialized expertise."

Investor appetite for life sciences startups has grown significantly since the onset of the pandemic. In 2021, $81.9 billion was invested worldwide in the sector, according to PitchBook data—an increase of over 140% from 2019. But investments are slowing down as turmoil in the public markets causes investor appetite to waver.

"No field is more exciting at the moment than healthcare," Papiernik said. "Because of the public markets, we are clearly feeling pressure. We have seen ups and downs in the market before, but healthcare is here to stay. This partnership gives us freedom to do what we do best—focus on entrepreneurship and innovation—but now with greater velocity and more firepower than ever before."

Sofinnova is one of Europe's most active investors in the life sciences sector and has over €2.5 billion under management. Its portfolio includes cancer treatment developer Artios and medical device startup Mainstay Medical.

Featured image by SOPA Images/Getty Images

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