If anyone was looking for green shoots of recovery in the healthcare services M&A, they wouldn’t have had to look very far this week. Deals for European imaging and cancer treatment provider Affidea and fast-growing German and Swiss ophthalmology group Sanoptis, together with a multi-billion euro bid for Australia-based multinational hospital giant Ramsay Health Care are set to give the sector a real boost.
For many, many months now we have all heard about how, clearly, the sector is very attractive to investors old and – as the recent deals announced confirm – new, and how there is lots of dry powder capital ready to find its way towards safer investments in healthcare in light of how inflation and the war in Ukraine are worrying markets.
And looking at this recent trio of deals or soon-to-be deals it does raise the question about whether healthcare assets are undervalued, especially in public markets. The bid being offered by KKR for Ramsay, at a chunky premium, suggests KKR knows something the stock market doesn’t and/or it is undervalued. So what do private markets know to set the bar so high?
As for the acquisition of Affidea and Sanoptis, it’s interesting to note we’re seeing a new breed of investor hitherto not heavily invested in the healthcare market stepping up to play. Groupe Bruxelles Lambert is a Belgian investment holding company investing up to €1bn of equity for Affidea which is its first substantive healthcare investment. And hot on the heels of that deal comes its Sanoptis acquisition. It is interesting to note how GBL was able to compete with the big PEs to seal the deals.
Other investors in a similar position to GBL will no doubt be looking at their portfolios, considering they too might be underweighted in healthcare, and diving in – which again can only push multiples up.
All that dry powder that’s been sitting their for months? It looks like the M&A cannons have been locked and loaded, and the touch paper lit, and there is a long list of hospitals and care homes trading on low multiplesWe would welcome your thoughts on this story. Email your views to David Farbrother or call 0207 183 3779.