Good morning Eurohubsters, Nina Lindholm here with the final Dealflow of the week.
Yesterday, my colleagues and I attended the healthcare-focused HPE Europe conference in London. There was a lot packed into the day so I got up early this morning to make sure I could give a full write-up. We’ve also got some thoughts on the attractiveness of UK and eurozone assets, considering the drop in the pound and euro – which has been a major topic this week.
Going digital. The general consensus from most panellists at the conference was that difficulties in the sector are driving the type of healthcare deals private equity firms are interested in. Labour shortages, wage inflation and supply chain issues give opportunities for digital healthcare, software providers and other medtech companies.
Some tech and healthcare combinations have the tendency to sound cold. Brian Donley, CEO of Cleveland Clinic, addressed this during a panel on key trends and opportunities in healthcare. He agreed that tech and digitisation are the future but added that “quality and safety can never be taken out of the equation”.
A while back, I spoke with CVC’s Cathrin Petty about her firm’s investment in Gloucester-based Spectrum Medical. She had similar views to the panellists regarding the opportunities in medtech.
“Off the back of covid, we’ve seen an acceleration of demand for better technology and also a constraint in terms of the supply and labour,” she said. “As a consequence, we’ve seen an increased interest into the space and a lot of new entrants.”
Across the Pond. Differences between the US and Europe were mentioned a few times. Alienor Oudin, an associate at TPG, spoke about the importance of understanding the local specificity in European countries. “It’s hard to find pan-European synergies,” she said.
Donley echoed her thoughts. “You need to understand different cultures,” he said. “Cross-border investment requires humility.”
Cross-border investment got a mention in a panel on pharma services too. John Kerins, managing director of Cain Brothers & Company, said it is “logical” for PE firms to look for opportunities in Europe. “Asia is nice to have,” he said. “Europe and the US you need to have.”
We’ve heard some thoughts on cross-border growth on PE Hub Europe previously too. In August, my colleague Craig McGlashan wrote about how EU regulation for medical devices produced and sold in the bloc has boosted cross-border expansion opportunities.
You can read Craig’s whole interview with Mark Braganza, managing director at Sun European Partners, here.
Starstruck. One of the most interesting panels of the day was the spotlight on women’s health and fertility. Not only did the panel include Olympic champion and three-times world champion heptathlete Dame Jessica Ennis-Hill, but it brought up multiple aspects I had never considered.
For PE specifically, women’s health is an area of growth according to Michelle Tempest, partner at Candesic. “Women will be the biggest spenders in the sector and on the high street,” she said.
We should probably add that our journalistic skills might need a little bit of honing, as at first we just thought ‘wow, that panellist looks a lot like Jessica Ennis-Hill’, until she introduced herself as the very same…
Eureka. We’re sticking with the healthcare theme a little longer. This week, ArchiMed announced an investment in PlasmidFactory. The commitment is the second of ArchiMed’s MED Platform II, which began fundraising in January.
PlasmidFactory, headquartered in Bielefeld, Germany, develops and manufactures high-grade plasmid and minicircle DNA, used to modify cells and produce viral gene therapy vectors for combating viruses, cancer and other medical ailments. Plasmids are a key component in the production of mRNA covid-19 vaccines.
“Plasmids, and cell and gene therapies in general, offer enormous potential to improve healthcare,” said Loïc Kubitza, partner at ArchiMed. “Combining ArchiMed’s financial power and international healthcare network with PlasmidFactory’s know-how and processes should scale up the group’s production and sales.”
ArchiMed is headquartered in Lyon.
Difficult prognosis. News from the UK in the last week or so have been turbulent, to say the least. Open any news site, and words such as crisis, emergency and panic are in every second headline.
Sunaina Sinha Haldea, the global head of private capital advisory at Raymond James, shared her thoughts on the attractiveness of UK and eurozone assets in the current climate with PE Hub Europe.
She explained that institutional investor sentiment has become bearish on the UK – and UK assets. “Private equity is a buy low, sell high business model,” she said. “PE-backed companies need to grow and if they’re fighting economic headwinds with an economy taking a second stagflationary hit, the prognosis is difficult.”
Secondaries market has also shied away from portfolios that have a large concentration of UK companies, according to Haldea. “There’s a double hit here – from the large depreciation in the currency – assuming the company was bought in the past – and the economic difficulties facing most sectors of the economy today.”
But it’s not all negative. “We are reminding institutional limited partners that new vintages of PE funds investing into the UK will have their pick from both an asset selection and valuation perspective, making for great entry points into best-in-class businesses,” Haldea explained.
In yesterday’s Dealflow, Craig also touched on the topic of strength of the dollar making European assets look more attractive to US private equity firms.
If you have any thoughts on the topic, drop me a note on firstname.lastname@example.org.
Like what you CEE. That interest is even travelling as far afield as eastern Europe. During the lunch break at the conference, we chatted to a private equity lawyer specialising in healthcare based in Prague who said he had been getting calls from US private equity firms – some he’d “never even heard of” from Boston and the West Coast – who were interested in buying healthcare firms in central and eastern Europe.
The particular focus was on research, pharma and product companies, he added.
That’s it from me today. I’ll go make some tea to wake myself up. Craig McGlashan will write to you on Monday.
Have a great weekend.