Almost two thirds of buyout firms are shifting to deals to health care and other sectors as they face the threat of losing control of their companies to banks, a recent survey by accountancy firm Grant Thornton has found.
“A growing number of private equity executives feel compelled to shift their focus to those sectors that are popular with the institutional investors that need to provide the finance for new acquisitions,” head of private equity, Mo Merali, said in a statement.
Some 64% of the firms surveyed expect to shift their sector focus in the coming 12 months, with 55% expecting to focus on health care, pharmaceuticals and the medical sector.
Some 48% see business support, infrastructure and logistics as their busiest area, the survey found.
Three quarters of buyout firms surveyed expect to expand their portfolios through acquisitions over the coming 12 months, but an even greater number expect to run into difficulties with their existing investments.
A total of 81% of more than 100 private equity firms surveyed expect some of their portfolio companies to breach banking covenants.
“A significant proportion of respondents will [need] to refinance some of their portfolio companies and more than half of our private equity clients expect difficulties in achieving the refinancing,” Merali said. —Simon Meads, Reuters