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How much does size matter?

How important is fund size in healthcare and how big is too big? This is a question that was raised during the healthcare panel moderated by HBI at the IPEM conference in Cannes.

With PE fundraising ongoing and piles of dry powder continuing to amass the question from some is ‘how on Earth is all this capital going to be deployed?’ Now you might think that is a silly question given the number of transactions we have seen in the past couple of years, but with the current geopolitical and macroeconomic tremors, what is the risk of not being able to deploy all that capital? 

The panel was comprised of Merieux, raising a new target fund of €500m, GHO Capital whose most recent fund closed at €2bn, Moravia, a fund-of-funds that invests in funds under €2bn, and newly formed Patient Square Capital which is well on its way to raising $4bn, in what could be the largest-ever first-time fund (there will be more on this in a future blog). 

Although nobody said they were worried about being able to deploy capital the consensus for most was that being on the small to mid-cap size makes them more agile and opens up more opportunities, especially in a more challenging market where smaller available assets make up the bulk. For Patient Square (which has already deployed $1bn) the risk is balanced by also providing growth capital. 

So what are the options? 

There are still some big deals to be done, but these are few and far between and debt-raising challenges lead to fluctuations in valuations means they are difficult and will probably continue to be so. 

The secondaries market is also an option and will probably be a lifeline for many. The increase in competition through low barriers to entry, sufficient dry powder, and new entrants from pension funds, sovereign wealth funds, and cash-rich corporates means that PE has been building secondaries platforms for some time. 

Will PE hold on for longer? The answer here is, probably. Already holding periods on average have increased from 4 to nearly 6 years and with more impact funds and the rising popularity of evergreen funds this is likely to increase. 

Whilst speed of deployment doesn’t equal quick return on investment, sitting on piles of cash to ride out a storm isn’t really an option. One solace is that healthcare as an asset class continues to outperform for investors – which should buy some breathing space. 


HBI 2023, June 19-21 in London is the ideal place to get an update on what exactly is going on with M&A and investment in healthcare services. Bringing together hundreds of investors with hundreds of service operators discussing their challenges and opportunities for growth, it is the only place to learn what works and what doesn’t to set your strategy for the next three years. The agenda has just launched and until October 31 you can save 32% or £790 on tickets. Click here to find out more and book your place.

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