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6 July, 2011 - 16:33 By Tony Quested

US venture capital firm considers UK base

Graeme Menzies, Mills & Reeve

A US venture capital firm has been so smitten by investment opportunities in the healthcare sector this side of the Atlantic that it is considering closing down its States operation and setting up a UK base to target Europe.

The firm, which cannot be named as yet, is working on deals with Graeme Menzies, an international lawyer with Mills & Reeve in Cambridge. Transactions are believed to be nearing completion.

The VC is based in New York, an American financial stronghold; the fact it is considering emigration to the UK to target Cambridge, London and Europe is testimony to the strength of the opportunities it is seeing, says Menzies.

Sufficient deals have presented themselves to have persuaded the VC to put its own fund on the back burner while it optimises the opportunities, although Menzies adds that his client is not averse to raising another significant fund in the not too distant future.

Menzies said: “The model for my client has recently changed shape. They are now taking a deal-by-deal approach to their activities here. My client is so dedicated to accessing the European market via the UK that it is now spending half its time over here and is considering winding down its US operations.”

The company is looking at a pilot scheme locally in relation to a telecare/telehealth investment and discussions are about to take place. An Italian partner has now become involved to add market muscle to the proposition. Talks are also being held with major UK hospitals regarding technology affecting day care surgery.

Menzies said that the US VC was able to leverage considerable funding from the Middle East and those strong links could open up new markets in the territory for European healthcare companies that it supported.

Menzies, who has been working on transatlantic deals for Mills & Reeve for around a decade, said that digital imaging and electronic record keeping were proving other areas of major interest to his client. The VC isn’t simply looking at healthcare; the Higher Education and IT segments are also proving attractive.

“The client has a lot of irons in the fire,” said Menzies. “I originally met them in New York and we have since built a very good relationship. We are kindred spirits in terms of our strengths in healthcare.

“Mills & Reeve advises the Department of Health on PCTs and works with various NHS organisations, including 70 NHS Foundation Trusts.”

Menzies met up with a number Mills & Reeve’s US network connections at their international group meeting in Istanbul last week and as a result sourced more potential work from a Boston firm keen to get closer to the UK.

Menzies will further strengthen Mills & Reeve’s transatlantic ties when he meets a top international practice in Columbus, Ohio and will also talk about investment opportunities in the UK at an event in Boston in mid-October.

The firm has helped local duo Dialight and Xaar expand internationally and recently advised Ubisense on its London float; as we report elsewhere in this supplement, Ubisense has a well established American presence and is making major inroads into the US transit and military sectors. Menzies also recently met with $2.5 billion turnover US digital instrumentation firm Carestream in Hemel.

He said: “We are seeing more Cambridge companies than ever expanding in the US and even making acquisitions there. And the numbers of American companies putting down roots in the Cambridge area appear higher than ever. Clearly the favourable foreign exchange rate has something to do with that but the buzz and culture of Cambridge at present also seems to be attracting this high level of activity.

“One hopes that the risk-averse and big spending approach of our American allies rubs off on investment levels here. These are smart guys who add value; they regard five million as a minimum play and often talk in tens and twenties of millions rather than ones and twos.”

• Photograph shows: Graeme Menzies, Mills & Reeve

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