Why doesn\'t private equity invest in HM?

Stem cell; cell based hair therapy
1

products and treatments for hair loss have created a billion dollar industry. i’m surprised that private equity hasn’t backed up HM startups with much needed ca$h - i.e. blackstone group, carlyle, texas pacific. these guys have been making the the news for the past several months now. buying up businesses in several different industries and some even going public themselves. these companies sit on massive stock piles of ca$h. they are not subject to the same tax laws as public companies are. once open for business, HM is sure to make any investor rich.

there are millions of us out there who will be willing to spend between $20-40k or even more to have it done. we already have been spending ridiculous amounts over the years on all the lotions, pills, shampoo’s, and treatments. what’s going to stop us from getting HM? nothing. we’ll save up or borrow the money to have it done. even the banks are going to get rich - assuming we don’t default on the loans we borrow to get HM.

when HM does come out, some group of investors are going to make serious ca$h.

2

Aderans is already backed by a large public company, funding is not a problem. Similarly, Intercytex is a public company that has easy access to funding on the stock exchange.

At one point, Dr. Gho’s research was funded by ABN AMRO.

At this stage, I don’t think it’s funding that is the issue. It’s probably how effective the protocol is and whether they can get regulartory approval.

3

Private equity invests only in established businesses, and so something like Intercytex (which is essentially a start-up) is not a suitable investment for them - it’s too risky. Instead, companies like Intercytex are more suitable for venture capital companies (VCs are pretty much like private equity but invest in riskier, high return projects like start-ups and biotech).

Scottish Equity Partners, a VC, actually provided seed capital to Intercytex and sold down their investment at IPO. I believe SEP still has small holding in Intercytex. You can read about SEP’s investment here:
http://www.sep.co.uk/venturer/profile_intercytex.html

I am guessing that most of the people on this board are from the US, and so may not have heard of SEP, but let me tell you that they are one of the most prestigious VC firms in Europe and arguably the world (I know because I work in the industry in London). Like most European firms, SEP’s policy is to remain out of the glare of the press, so it is not unusual for people to think that because no one’s heard of them, the mustn’t be very good. Most VCs are staffed with people more qualified than private equity (PhDs vs mere MBAs). You can see this when you check out the team profiles on their website.

So, when people compare Intercytex to Gho and Bazan, there is a big difference here - Gho and Bazan never received any sort of funding from specialist biotech VCs. Intercytex on the other hand did, which gives their endeavour a lot of cred.

I know someone will ask why SEP sold down at IPO. That is simply the model for VCs. You take 80% of your profit early, and leave 20% in the company. If all goes well, that 20% will turn into 200%, and the VCs make a lot of money. Of course, they can leave all their money in the company but then there is a possibility that the venture might fail and they will lose it all. Better to be safe that sorry, and VCs aren’t dumb to take too much risk.

All in all I’m not saying that Intercytex is a sure thing, but if you think it’s another Gho or Bazan, then I think you are really selling them short.

4

Thanks, Tom! That was the most informative post about Intercytex I’ve read in a looong time.

Best,
BB

5

» Thanks, Tom! That was the most informative post about Intercytex I’ve read
» in a looong time.
»
» Best,
» BB

Agree! Very informative that.

Staying slightly on the same subject (ie the business end of HM), quite a few people mention that Bosley have licensed ICX-TRC for the US market. This is not quite correct. They actually have signed a ‘First Option’ agreement with ICX, so they get first look at the product. This does not mean neccasarily that they will get the distribution rights automatically, a furthur main deal has to be agreed on.

So, for example, if Bosley were to say “Yeah, we’ll perform your HM technique in our wonderful wonderful clinics but we get 99% of the profits and you guys ahve to carry the overhead” ICX could tell them to screw off and take their business elsewhere.

Is there anyone here who works in business/finance who can elaborate on my laymans description?

6

» products and treatments for hair loss have created a billion dollar
» industry. i’m surprised that private equity hasn’t backed up HM startups
» with much needed ca$h - i.e. blackstone group, carlyle, texas pacific.
» these guys have been making the the news for the past several months now.
» buying up businesses in several different industries and some even going
» public themselves. these companies sit on massive stock piles of ca$h.
» they are not subject to the same tax laws as public companies are. once
» open for business, HM is sure to make any investor rich.
»
» there are millions of us out there who will be willing to spend between
» $20-40k or even more to have it done. we already have been spending
» ridiculous amounts over the years on all the lotions, pills, shampoo’s,
» and treatments. what’s going to stop us from getting HM? nothing. we’ll
» save up or borrow the money to have it done. even the banks are going to
» get rich - assuming we don’t default on the loans we borrow to get HM.
»
» when HM does come out, some group of investors are going to make serious
» ca$h.

Try telling investors that you’re putting money into a baldness cure.

Might as well tell them you’re using it to build a perpetual motion machine.

That is because most people have been conditioned to thinking of baldness as not serious and as a joke (this is even more true of people with lots of money–because you almost always have to value money above EVERYTHING to have made a lot of it).

Even the ninnies here often parrot the folk wisdom that baldness is not serious.

The world is finally becoming a little enlighted, which is why a little serious money is now finally being thrown at HM.