• Home
  •  
    Regions
    • Europe
    • UK & Ireland
    • DACH
    • Nordic
    • France
    • Southern Europe
    • Benelux
    • CEE
    • Asia
  •  
    Deals
    • Buyouts
    • Venture
    • Exits
    • Refinancings
    • Build-up
    • Turnaround
    • Secondaries
    • Advanced deals search
  •  
    Funds
    • Buyout
    • Venture
    • Mezzanine
    • Debt
    • Funds-of-funds
    • Secondaries
    • Fundraising pipelines
    • Advanced funds search
  •  
    GPs & LPs
    • GP profiles
    • LP profiles
    • GP news
    • LP news
    • Sponsors search
    • LPs search
  •  
    Secondaries
    • Deals
    • Funds
    • News
    • Analysis
  •  
    People
    • People moves
    • Analysis
    • In Profile
    • Q&A
    • Videos
    • Comment
  •  
    Analysis
    • In Profile
    • Fundraising
    • Q&A
    • Comment
    • Videos
    • Podcast
    • Reports
    • Data Snapshots
  •  
    Unquote Data
    • Deals search
    • Exits search
    • Funds search
    • Sponsors search
    • Advisers search
    • LPs search
    • League tables
    • Reports
  • Sign in
  • Sign in
    • You are currently accessing unquote.com via your Enterprise account.

      If you already have an account please use the link below to sign in.

      If you have any problems with your access or would like to request an individual access account please contact our customer service team.

      Phone: +44 (0)203 741 1137

      Email: Georgina.Lawson@acuris.com

      • Sign in
     
      • Newsletters
      • Account details
      • Contact support
      • Sign out
     
  • Follow us
    • Twitter
    • LinkedIn
  • Free Trial
  • Subscribe
Unquote
Unquote
  • Home
  • Regions
  • Deals
  • Funds
  • GPs & LPs
  • Secondaries
  • People
  • Analysis
  • Unquote Data
  • You are currently accessing unquote.com via your Enterprise account.

    If you already have an account please use the link below to sign in.

    If you have any problems with your access or would like to request an individual access account please contact our customer service team.

    Phone: +44 (0)203 741 1137

    Email: Georgina.Lawson@acuris.com

    • Sign in
 
    • Newsletters
    • Account details
    • Contact support
    • Sign out
 
Unquote
  • DACH

German healthcare deals on the decline

German healthcare investments
  • Harriet Bailey
  • Harriet Bailey
  • 19 August 2014
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Google plus  
  • Send to  

Healthcare dealflow in Germany has plummeted following a strong 2013. With the sector typically a mainstay for the region’s private equity market, can it return to rude health? Harriet Bailey reports

In the first half of this year, there were just nine deals in the German healthcare sector – a sharp drop from the 19 deals recorded in the second half of 2013 and a divergence from the upward trend in volume terms beginning in 2012, according to unquote" data. Yet when it comes to GDP spending, Germany allocated a hefty 11.3% of its budget to healthcare in 2012 – a total of €14.5bn. Given decent public spending in the sector, why is private equity turning away from the space?

Jörg Meißner, partner at law firm Morrison & Foerster's Berlin office, agrees there has been little recent transaction activity in the area of healthcare provision. "Ten years ago there was a trend; publicly held hospitals and nursing homes were put up for sale. Now we're in the consolidation phase and in Germany we have in fact too many hospital beds in the bigger cities," says Meißner. Given this, could outsourcing of healthcare provision be the best opportunity for private equity?

"Healthcare is about offering better and more efficient services," says Pascal Noth, partner at Palamon Capital Partners. "It's not just a good thing to do but it's something that finds a lot of acceptance in the market." However, Noth also warns that the asset class needs to be prepared to invest in the long term as "it's difficult for people who want to make a quick buck" in the sector. Indeed, Palamon's 3x return from its 2007 investment in the German healthcare space highlights this; the GP divested its majority stake in German hospital group purchasing organisation Prospitalia after a seven-year holding period.

Public holdings
More than two-thirds of the hospital facilities in Germany are owned by local authorities or not-for-profit organisations, including the German Red Cross, according to a 2013 report by think tank Civitas. Private ownership has increased by more than double; in 2010, only 15% of hospital care was in private hands, compared to a third of the market today. This distinct shift towards privatisation is an important trend for private equity, which has not just been observed in Germany. To take just one notable example from the UK, July 2013 saw the Department of Health sell an 80% stake in Plasma Resources UK to Bain Capital for £230m in an all-equity transaction. Outsourcing netted the government both £90m in cash and a committed investor, as Bain planned to pump an additional £50m into its new acquisition.

This very public nature of healthcare might have discouraged private equity investment in recent years. Indeed, the Bain deal was subject to outcry from former health minister and peer David Owen, who condemned the privatisation of public assets as detrimental to patient welfare due to differing regulations governing the NHS versus private owners. Outside of the UK, Sweden has witnessed debates over the high level of involvement by the asset class in the healthcare space in recent years. There, the Social Democrats argued that the profit-maximising and potentially short-term nature of private equity ownership presented a danger to the quality of services available to patients. Do investors have the appetite to deal with these levels of public scrutiny?

Sick men of Europe
Overall though, recent low activity seen in the sector is not a uniquely German anomaly – unquote" data also shows pan-European healthcare dealflow is at its lowest level for 10 years. "Healthcare is more sporadic than retail or business services where the number of players is much greater," says Noth. "I think it attracts more local experts – if you want to invest in e-commerce then you can do it from anywhere, but you need to know about the local organisations and regulations in the healthcare market."

Hopefully then, healthcare deals will bounce back in the remainder of 2014. There seems to be an abundance of opportunities to invest if private equity has the time available to implement efficiency strategies, the capital to consolidate a fragmented market and the inclination to turn the other cheek to any negative press.

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Google plus  
  • Send to  
  • Topics
  • DACH
  • Healthcare
  • Market Insight
  • Sector focus
  • Palamon Capital Partners
  • Bain Capital
  • Top story

More on DACH

EMEA Public to Private M&A
Change of mind: Sponsors take to de-listing their own assets

EQT and Cinven seen as bellweather for funds to reassess options for listed assets trading underwater

  • Investments
  • 04 September 2023
EU foreign subsidies regulations
EU FSR could impact PE fundraising with potential rise in ‘clean funds’

FSR could lead GPs to create funds without foreign LPs; red tape around sovereign wealth funds likely

  • Regulation
  • 01 September 2023
Jan Cerny of BHM Group
BHM Group builds on PE strategy, eyes European medtech and renewable energy acquisitions

Czech Republic-headquartered family office is targeting DACH and CEE region deals

  • Investments
  • 01 September 2023
Bettina Curtze of Redalpine
Redalpine expands leadership team amid CHF 1bn-plus fundraise

Ex-Rocket Internet leader Bettina Curtze joins Swiss VC firm as partner and CFO

  • Venture
  • 31 August 2023

Latest News

Fund closes in US dollars
  • Funds
Stonehage Fleming raises USD 130m for largest fund to date, eyes 2024 programme

Multi-family office has seen strong appetite, with investor base growing since 2016 to more than 90 family offices, Meiping Yap told Unquote

  • 05 September 2023
Clinical trials and biotechnology
  • Buyouts
Permira to take Ergomed private for GBP 703m

Sponsor deploys Permira VIII to ride new wave of take-privates; Blackstone commits GBP 200m in financing for UK-based CRO

  • 04 September 2023
Public sector software
  • Exits
Partners Group to release IMs for Civica sale in mid-September

Sponsor acquired the public software group in July 2017 via the same-year vintage Partners Group Global Value 2017

  • 04 September 2023
EMEA Public to Private M&A
  • Investments
Change of mind: Sponsors take to de-listing their own assets

EQT and Cinven seen as bellweather for funds to reassess options for listed assets trading underwater

  • 04 September 2023
Back to Top
  • About Unquote
  • Advertise
  • Contacts
  • About Acuris
  • Terms of Use
  • Privacy Policy
  • Group Disclaimer
  • Twitter
  • LinkedIn

© Merger Market

© Mergermarket Limited, 10 Queen Street Place, London EC4R 1BE - Company registration number 03879547

Digital publisher of the year 2010 & 2013

Digital publisher of the year 2010 & 2013