Defensive sector or not, buyout activity in the healthcare area was as depressed as elsewhere during 2009. But things are looking up and a spate of deal completions and possible exits in the first few months of 2010 are providing a welcome tonic for a buyout market in rehabilitation. Julian Longhurst reports
With the buyout market in tatters during 2009, it would have been reasonable to expect deal hungry investors to focus heavily on searching out opportunities in defensive sectors such as healthcare. But the conditions were so dire that even the healthcare segment remained becalmed. Just 19 European buyouts were completed in the sector during 2009. This represents 7.6% of the market by volume, compared with an average of 6.9% over the previous four years.
In 2010, however, there have already been 13 healthcare/pharma buyouts (out of a total of less than 75 deals) and a few more sales have been mooted. In March, Care UK and Deb Group were acquired for €465m and €355m respectively, while French groups Sebia (€800m) and Vedici (€200m) were also bought out during the same month.
However, it is the Nordic market that seems to be leading the field in healthcare investments, with secondary deals the order of the day. Ambea was acquired from 3i by Triton and KKR in February for €850m, while last month Bridgepoint Capital bought Solhaga from Valedo. This week, EQT announced that it was putting portfolio group Aleris up for sale, while Nordic Capital is reportedly looking at an IPO for its healthcare group Falck. The latter may yet end up in the hands of another financial buyer: after all, Ambea had been earmarked for a listing.
The healthcare services segment, with its steady revenues and good visibility is very attractive to generalist and specialist investors alike
"The Nordic healthcare segment has always been a good hunting ground for private equity investors," according to Carl Harring of HgCapital. "There is a strong base of knowledge in the region and a real focus on social care as a whole. What's more, some of the businesses that have been targeted in recent times have fundamentally done very well under private equity ownership and the markets appreciate that," he continues.
Indeed, HgCapital is one of the most recent buyers in the region, acquiring the Swedish provider of specialist disability care Frösunda from Polaris this week for an undisclosed amount.
So far, the dealflow has been dominated by activity in the healthcare services subsector, with few important transactions in the medical products or pharmaceuticals areas. And this is how it is likely to remain, as Harring explains: "The healthcare services segment, with its steady revenues and good visibility is very attractive to generalist and specialist investors alike. By contrast the pharmaceuticals and healthcare products areas require a much more specialised approach".
Therefore, with leverage coming back, ample dry powder and a need among many buyout houses to bank as many profitable exits as possible before any further fundraisings, it looks like deals in the healthcare sector might just be what the doctor ordered.
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