These are strange times. Two of the largest players in Europe are likely to IPO before the end of 2020. Meanwhile, advisers expect secondary sales to other funds run by the same PE house to account for up to half all sales.
Whilst some groups such as Exemplar have recently gone for what one described as “nutty prices”, many others have failed to sell. Meanwhile Synlab and Diaverum are set for substantial IPOs, after failing to find PE houses willing to step in.
We suspect we are nearing the top of the cycle. Despite frenetic activity and the emergence of new willing buyers, particularly in property, there appears to be something akin to a buyers’ strike for slightly sub-par assets. The likely solution is PE houses selling on to another of their own funds, sometimes one with another PE house as an LP: this is what has happened for at Curium Pharma, as HBI exclusively revealed.
Meanwhile investors are beset by grave insecurity. Are we going to see rising inflation as countries print money? Will we see a deep recession?
In health care much hangs on two factors: demand for electives and how operators are treated by government payors. It is clear that the former is set to soar. Waiting lists for elective procedures are up 100 times in the NHS, for instance, in the UK and this is mirrored albeit in a smaller scale in better and more viable healthcare systems. As for payor relationships, every big hospital and lab operator we talk to tells us that these have changed for the good.
Governments which were intent on purloining PPE at customs from private operators are now keen to buy up spare capacity and offer huge contracts. We don’t see these two basics changing any time soon.We would welcome your thoughts on this story. Email your views to Max Hotopf or call 0207 183 3779.