Infra shows greater post-COVID appetite
Recent deals in Europe show private equity infrastructure funds have returned to deal-making much more quickly than normal private equity ones, accounting for the last three major deals in services. Why?
Infrastucture funds’ entry into healthcare is nothing new but going for asset-lite businesses does mark a substantial change in the last few years. In recent weeks, they have struck deals for a propco-light nursing home group, a Spanish hospital and outpatient clinic operator and, now, an outsourcing business.
Of the four deals by private equity in European healthcare services since COVID whose value exceeds €100m (enterprise value with a majority stake taken), infra funds have been three and may even have been four. An advisor told HBI it was possible that KKR will buy Elsan through an infrastructure-focused fund with a longer exit horizon.
That compares to just one of the six largest deals in 2019 and pre-COVID: I-squared buying French care home group Domidep.
Infrastructure buyers may now be outbidding private equity funds for recent assets. This could be due to having more dry powder which needs to be offloaded or their lower cost of capital proving useful in the recent volatile capital market climate.
As infra funds are a more recent entrant, ‘normal’ private equity funds may be more likely to already hold healthcare service assets in Europe and thus are more focused on decided how they will repackage those businesses for an exit in a post-COVID landscape.
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