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Private Equity Injects Fresh Capital into Healthcare

December 06, 2018, 08:01 AM
Filed Under: Bankruptcy

Healthcare-focused private equity is on the brink of a record year, according to new data from Preqin. Capital has flowed into the sector, with healthcare-focused private equity-backed buyout deals seeing year-on-year increases in aggregate deal value since 2015. As at November, 585 healthcare-focused deals have been announced in 2018 YTD, worth a total of $56 billion – putting the year on track to surpass the 619 deals worth a record $57 billion seen in 2017. Deal activity looks set to increase, as the industry holds $56 billionn in dry powder, pushing total assets under management to $199 billion.

Although just 84 healthcare-focused private equity funds have held a final close as of November, they have raised $22 billion, making this year the fourth consecutive year in which the industry has raised over $20 billionn. This also puts the year on track to hit similar levels to those seen in 2017, when 140 funds raised $26 billion.

“The private equity healthcare industry is booming: strong fundraising, record levels of dry powder available to invest, and record numbers of deals in the sector," said Christopher Elvin, Head of Private Equity. "It is a testament to the healthcare industry’s growing importance for private equity: having once been a sector with few dedicated players, it is now an integral part of the buyout deal making ecosystem. It’ll be interesting to keep an eye on the US market in particular, as the country is experiencing fast-paced regulatory changes in its healthcare coverage, which may provide further opportunities for investment.”

Key Healthcare-Focused Private Equity Facts:

  • Healthcare-focused private equity-backed buyout deal activity is on the brink of a record year: as at November 2018, 585 deals have been announced worth a total of $56bn.
  • 2018 saw the announcement of the largest healthcare-focused deal since the Global Financial Crisis: KKR bought Envision Healthcare Corporation from Clayton Dubilier & Rice, a public-to-private deal worth $9.9bn.
  • The healthcare private equity industry holds $199bn in assets under management, including $56bn in dry powder – a record high.
  • The bulk of healthcare-focused private equity dry powder is focused on North America, with fund managers earmarking $36bn for the region.
  • In 2018, 84 healthcare-focused private equity funds have held a final close and raised $22bn.
  • This brings average fund size to $261mn – the largest average fund size for the healthcare industry in over a decade.  

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