When Matilda Jane Clothing, a girl’s apparel brand backed by Webster Capital, abruptly closed its doors in 2022, the deal was already practically out of sight from Webster’s rearview mirror. The firm had moved on from consumer investing entirely and made an all-in bet on healthcare investing: It had a new focus, a fresh $1.7bn fund ready to deploy, and a new name. Children’s clothing companies were a problem of the past.
Today, Webster’s problems are harder to leave behind.
Within the span of a financial quarter, lenders seized two of Webster’s biggest bets in behavioral health, a core focus area — psychiatric care provider Discovery Behavioral Health was taken over by creditors in December after a bitter court battle, while lenders in BayMark, one of the largest addiction treatment providers in the US, wrote off about $400m in loans in exchange for the keys to the company.
Now, Webster finds itself battling one of the worst stretches hitting behavioral health in decades — just years after making a massive bet on the sector.
“If you look at the vintage of when those investments were made, they were at a time whenever that was the flavor of the...
