Investment themes Who owns what Management advisors Mapping the changes in portfolio mix Intelligence tables from LaingBuisson Who and why SECOND EDITION Private Equity in Healthcare Independent. Intelligent. Insightful. Asset-liteXxxxx xxx xx xxxxxxx or asset backed Infrastructure funds have led a return to asset backed investments The leading adviser to the UK healthcare sector Rothschild & Co is one of the world’s largest independent financial advisory groups, with 2,800 people in over 40 countries worldwide. Our Global Advisory business has an impartial and insightful perspective on M&A, strategy and financing advisory to help our clients formulate and achieve their strategic goals. We advise on more healthcare deals in the UK and in Europe than any of our competitors. This provides our dedicated healthcare team of over 30 bankers in London with exceptional insight into the sector, and the experience to advise on the most complex transactions. The Cambian Group Oasis Healthcare Alliance Medical Group Acorn Care and Education (2016) (2016) (2016) (2016) • Adviser to Cambian on the £377m • Adviser to Bridgepoint and • Adviser to M&G Investments • Adviser to Ontario Teachers’ disposal of its adult services business management on the £835m sale and management on the £760m Pension Plan and other to Cygnet Health Care, a subsidiary of of Oasis Healthcare to Bupa sale of the business to Life shareholders on disposal of Acorn Universal Health Services Healthcare Group to the National Fostering Agency Abbey Care Homes The Priory Group Care UK Cancer Partners UK (2016) (2016) (2015) (2015) • Adviser to Abbey Care Homes and • Adviser to Advent International • Adviser to Bridgepoint and Care UK • Adviser to Apposite Capital on the Lifestyle Care on the disposal and management on £1.5bn sale of on the disposals of its Learning disposal of Cancer Partners UK to of a 10-care home portfolio to Priory to Acadia Healthcare Disabilities and Mental Health GenesisCare Healthcare Homes and Care at Home divisions Autism Care UK Nuffield Health Voyage Care Maria Mallaband Care Group (2015) (2015) (2014) (2014) • Adviser to Maria Mallaband Care • Adviser to Nuffield Health on its • Adviser to HgCapital and management • Adviser to Maria Mallaband Care Group on the disposal of Autism debt facilities on the £375m sale of the business Group on the sale and leaseback of Care UK to Lifeways to a consortium of Partners Group, 23 care homes to HCP Duke Sreet and Tikehau rothschild.com C8541 Healthcare Advert_v12.indd 1 20/01/2017 16:19 Introduction The leading adviser to the UK healthcare sector Private equity continues to be highly relevant to healthcare investing across services, medtech and pharma. However, healthcare services remains the dominant sub sector and represents 80% of portfolios and significant capital deployed. Nevertheless, in Europe Bain and Cinven’s Stada take-private was a pharma asset and the largest single private equity Rothschild & Co is one of the world’s largest independent financial advisory groups, with 2,800 people in investment of the year. Despite that, over 40 countries worldwide. Our Global Advisory business has an impartial and insightful perspective on PE have their strongest track record in M&A, strategy and financing advisory to help our clients formulate and achieve their strategic goals. healthcare services both via buy-and-build to create many of the largest providers We advise on more healthcare deals in the UK and in Europe than any of our competitors. This provides our today, and also with growth capital. dedicated healthcare team of over 30 bankers in London with exceptional insight into the sector, and the This report looks at the landscape, the experience to advise on the most complex transactions. trends, the investors and the data on the market as we enter 2018. The Cambian Group Oasis Healthcare Alliance Medical Group Acorn Care and Education HEALTH AND SOCIAL (2016) (2016) (2016) (2016) • Adviser to Cambian on the £377m • Adviser to Bridgepoint and • Adviser to M&G Investments • Adviser to Ontario Teachers’ CARE... NEEDS disposal of its adult services business management on the £835m sale and management on the £760m Pension Plan and other to Cygnet Health Care, a subsidiary of of Oasis Healthcare to Bupa sale of the business to Life shareholders on disposal of Acorn Universal Health Services Healthcare Group to the National Fostering Agency MAJOR INVESTMENT AND INNOVATION... PRIVATE EQUITY IS PROVIDING BOTH Abbey Care Homes The Priory Group Care UK Cancer Partners UK (2016) (2016) (2015) (2015) • Adviser to Abbey Care Homes and • Adviser to Advent International • Adviser to Bridgepoint and Care UK • Adviser to Apposite Capital on the Lifestyle Care on the disposal and management on £1.5bn sale of on the disposals of its Learning disposal of Cancer Partners UK to of a 10-care home portfolio to Priory to Acadia Healthcare Disabilities and Mental Health GenesisCare Tim Hames Healthcare Homes and Care at Home divisions BVCA Director General Autism Care UK Nuffield Health Voyage Care Maria Mallaband Care Group (2015) (2015) (2014) (2014) • Adviser to Maria Mallaband Care • Adviser to Nuffield Health on its • Adviser to HgCapital and management • Adviser to Maria Mallaband Care Group on the disposal of Autism debt facilities on the £375m sale of the business Group on the sale and leaseback of Care UK to Lifeways to a consortium of Partners Group, 23 care homes to HCP Focused healthcare investors Duke Sreet and Tikehau More healthcare-only funds emerge rothschild.com laingbuisson.com | PRIVATE EQUITY IN HEALTHCARE | 3 C8541 Healthcare Advert_v12.indd 1 20/01/2017 16:19 WHEN THE EXCEPTIONAL DEMAND THE EXCEPTIONAL, THEY COME TO COUTTS. For over 300 years, Coutts has been the bank of choice for exceptional people with an unrivalled reputation for managing their unique financial requirements. COMMERCIAL BANKING WEALTH MANAGEMENT PRIVATE BANKING C001686_Coutts_Exceptional_Ad_Healthcare_297x210_V1.indd 1 23/01/2017 13:16 Introduction Private Equity in Healthcare SECOND EDITION Private equity has and continues (including fostering), diagnostics (often to play an integral part in acquiring technology enabled), staffing and and investing in portfolio companies homecare. The last sector, despite that provide healthcare – PE backed recent challenges such as Mitie businesses represent nearly 5% of all exiting that market (having acquired healthcare in the UK so are a signifi- its homecare business from private cant part of the market. equity (August), and then selling it for We have taken a look at the a nominal sum back to private equity landscape and the key drivers of the Apposite)), still has investors buying market, and in particular where the opportunistically (Aurelius acquiring focus of investment is and how it has Allied Healthcare) or looking for changed. After a quieter 2015, activity successful alternative models (such as picked up significantly in 2016 and in Healthcare at Home’s focus on higher 2017 there was a further acceleration acuity). Henry Elphick, CEO, with 22 transactions where PE invested. LaingBuisson The question investors are asking is whether this is a sellers’ market, and if they are buyers, how can they justify acquired Alloheim, a German OpCo the price and remain confident of the THE QUESTION elderly care provider in Germany from returns. INVESTORS ARE Carlyle and the dental chain Hesira from Despite the expectation that asset Oaktree, following EQT’s acquisition backed providers would be out of ASKING IS WHETHER of Curaeos a few months earlier. favour with PE as a result of their THIS IS A SELLERS’ BC Partners acquired a portfolio of exposure to government reimbursement hospitals from Priory to form Elysium and lower underlying market growth MARKET Healthcare (leveraging its previous rates, significant capital continues to ownership of Partnerships in Care) and be invested in this area. Combined, has continued to acquire asset this specialist care and elderly care account year (Bradby Park, Lighthouse, Raphael for 31 portfolio companies. Healthcare). In pharma services The public bond markets have also Transaction have been broadly Vitruvian acquired Phlexglobal to add to been open to this sector (Care UK, spread across all sub sectors – CRF Health, while Ardian/GHO acquired Voyage (who refinanced), Bupa, Four hospitals (Circle take private), social Envision Pharma last year (leveraging Seasons), although performance for care (Apposite/Swanton Care, Bridges/ GHO’s deep knowledge of the CRO and investors has been varied and volatile Shaw, Salutem/Clearwater, Fremont/ pharma services sector) at times. Porthaven), dental (Jacobs/Southern 2017 and the start of 2018 have There are now nearly 140 portfolio Dental, CBPE/Rodericks), pharma been very active, but the backdrop of companies across healthcare owned by services (Avista/Envigo, CapVest/ tightening interest rates, the end of QE PE in the UK. Nextpharma), and vetinary (Inflexion/ and the return of inflation contrasts with What is interesting is how the profile Medivet). PE investors who were able plenty of dry powder for private equity of that portfolio has changed from last to move quickly, appeal to management funds and an economy that continues to year – today the largest number of teams and see value continue to perform strongly. portfolio companies (16) are active in acquire, but with more success on specialist care and (15) in elderly care. asset-lite businesses – Nordic Capital The asset intensive segments have made a come-back,