Arch Venture Partners raises $400 million fund

SAN FRANCISCO Wed Aug 27, 2014 11:47am EDT

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SAN FRANCISCO (Reuters) - Chicago-based Arch Venture Partners raised a $400 million fund to invest in early stage companies, the firm announced Wednesday, underscoring renewed investor confidence in the once moribund life sciences sector.

The firm will deploy the cash in healthcare, energy and materials companies globally, it said.

Arch is best known for healthcare and biotech, with portfolio companies including Agios Pharmaceuticals Inc, Bluebird Bio and Receptos Inc. Those companies held initial public offerings last year and have since more than doubled their prices.

Those sectors had suffered for years until recently, when a number of successful IPOs have led to greater interest in life sciences.

Arch's previous fund, a $400 million vehicle dating from 2007, has a 24 percent internal rate of return since inception, according to public pension funds. That compares with Arch's 2004 fund, a $350 million vehicle with a 4 percent return.

The firm had originally filed with the Securities and Exchange Commission in April to raised $250 million for its eighth fund. The final tally exceeds the target by more than $150 million.

Arch, originally created in part to capitalize on research developed at the University of Chicago, was spun off from the university in the early 1990s. It has offices in Chicago, Seattle, Austin and San Francisco.

(Reporting by Sarah McBride; Editing by Lisa Shumaker)

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