Canadian pension funds sniffing around healthcare
We know that there is no shortage of institutional money destined for healthcare. For long term and defensively minded funds the attractions are obvious. The glut may also be about to grow as Ontario Teachers’ Pension Plan (OTPP) joins the consortium looking to take Chinese operator, iKang, private. OTPP was also interested in buying German lab group, synlab, last year. So are investors increasingly building portfolios across European and Emerging Market healthcare?
The big Canadian pension funds are probably the best examples of this. Not just OTPP, but also the Canada Pension Plan Investment Board (CPPIB) and Investissements PSP like the sector. CPPIB has a stake in the care home group Orpea and PSP Investissements in its rival Korian. CPPIB told us that they were attracted by Orpea’s Far East expansion plans. This makes sense: CPPIB recently opened a Hong Kong office to give it more strength on Chinese ground, and the Orpea deal follows a relationship investing model with long-term engagement, and a place on the board. We now hear that Orpea’s first Chinese home will open shortly.
It will be interesting to see if these huge US$100bn plus funds can use their global reach and huge capital reserves to boost the internationalisation of this sector. Perhaps they will even gain a march on competitors like big sovereign-backed funds IHH and Temasek and the global private equity groups like Advent and Apax.
It is their size, of course, which enables them to make some big and lumpy bets. Most fund managers would only invest in quoted companies and most see the quoted healthcare service groups, even those as large as Apollo, as too small and illiquid.
We would welcome your thoughts on this story. Email your views to Max Hotopf or call 0207 183 3779.
