Private equity is gearing up for another bumper year in healthcare, according to Deloitte, with around £15bn of private equity investment circling healthcare assets. Key healthcare drivers in 2006 include: property fund interest in healthcare assets; government investment and changing regulations, for example dentistry; demographic trends pushing demand for long-term healthcare and wealth and awareness in the cosmetic industry.
David Jones, corporate finance partner and healthcare expert, said: “The private equity industry completed £4.5bn worth of deals in the healthcare sector in 2005, according to the Centre for Management Buy-Out Research, which was a huge leap from £1.5bn the previous year. 2006 has taken off to a flying start, showing that the sector is not just a flash in a pan.”
Deloitte has seen private equity firms increasingly acquiring healthcare businesses and splitting the operating model and the assets: so called ‘propco/opco’ deals. This split is driving the biggest healthcare multiples as property funds look to acquire the assets alongside private equity firms looking at the operations.