Many people thought that the pandemic would delay private equity exit windows by at least another year, pushing some cycles out as far as six years. But with groups like Almaviva and Lifebrain – bolstered by the pandemic and protected by governments – we’re suddenly seeing a lot more investors sell out at three.
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Almaviva’s owner Antin is an infrastructure fund so it was a little surprising to learn that banks have been appointed for a sale just three and a half years into that ownership. Similarly, Investindustrial has just received first-round bids for Italian lab group Lifebrain, which it only bought back in 2018, and Elsan bought C2S nearly three years to the day from Eurazeo’s entry.
There were many groups approaching the fourth/fifth year of ownership when the pandemic hit, like large European lab groups Synlab and Unilabs. A year of unusual activity and non-normalised revenue/EBIDTA could have left many owners trying to ‘return to normal’ before looking to exit. However, especially in sectors like labs and hospitals, which faired well or were protected by governments, many have been cashing out earlier than expected.
Outside of the pandemic, Antin and Eurazeo had doubled Almaviva and C2S in size relatively quickly, giving a solid base for an exit. The pandemic, however, has only boosted potential as, for French hospitals at least, the amount of support from governments appears to have increased valuations. Elsan got a higher price than most people HBI spoke to thought it would.
Looking to Lifebrain, the lab sector has faired extremely well with many of the large groups doubling or tripling EBITDA. Alongside EQT’s earlier purchase of Cerba, four years after Partners’ Groups’ entry, it is expected to command near-record valuations of 16x EBITDA.
So if a three-year exit window is looking more likely then who might be for sale soon? Nordic’s European Dental Group is certainly likely (and we’ve been told as much), perhaps so is CVC’s Hellenic Healthcare (especially considering its recent consolidation into the payor market there). Nordic has also owned Ober Scharrer for three years although it’s not a sector that has done as well out of the pandemic as hospitals and labs.
We may not have to wait as long as expected to find out.
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