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PE backs Europe’s healthcare consolidation


Private equity funds are still seeking consolidation opportunities in European healthcare as the fragmented sector grapples with rising costs and labor shortages.

Last year saw €19.9 billion (about $20.9 billion) invested into European healthcare across 300 private equity deals, according to PitchBook data. While this represents a significant drop from the previous year in terms of total capital invested, it still represented the second-busiest year in terms of overall deal count over the past five years.

The largest deals to happen last year included the £870 million take-private of UK care provider CareTech in September by a group including Dbay Advisors and Three Hills Capital, and Aurelius Group‘s acquisition of UK-based Hallo Healthcare Group as part of a £477 million deal involving LloydsPharmacy. Even in 2023, sizable deals are being completed, including KKR’s €3 billion acquisition of Ivirma Global, a Spanish chain of fertility clinics.

While the sector faces a number of unique challenges—including ongoing industrial action and growing regulatory scrutiny—it is still relatively insulated from downturns compared to other sectors, thanks to stable demand, ongoing innovations and demographic trends.

“There’s still lots of opportunity because the European healthcare market is still incredibly fragmented,” said Braeden Donnelly, a private equity partner at law firm Ashurst. He added that while there have been some large deals in the last couple of years, opportunities also remain in smaller sub-sectors for PE firms looking to roll up businesses and exploit economies of scale.


One firm that has sought to take advantage of consolidation opportunities in Europe is INVL Baltic Sea Growth Fund, which picked up a 70% stake in Inmedica, a Lithuanian network of private healthcare clinics, in 2019. During the holding period, the company has seen its annual revenues grow from  €10 million to €100 million, largely through inorganic growth.

“When we bought Inmedica, it was mainly in primary care and general practitioners. All secondary services were being outsourced to other providers,” said Nerijus Drobavičius, a partner at INVL Baltic Sea Growth Fund and chair of Inmedica.

Drobavičius explained that as part of its expansion strategy, Inmedica has acquired several secondary specialist healthcare providers including cardiologists, urologists and gynecologists. The company continues to make bolt-on acquisitions. In February and March, Inmedica acquired two Lithuanian healthcare chains: RVL, a dental clinic, and the Vilnius Implantology Centre Clinic, respectively.

Another firm that has been active in the sector is UK-based Livingbridge. Last year, the firm recently invested in Nourish Care Systems, a provider of digital care planning software to the UK social care sector.

“Healthcare has for the most part been a resilient sector,” said Sanjay Panchal, a partner at Livingbridge. He added that this resilience was especially evident post-pandemic, and while the deal environment began to soften mid-2022, the pipeline for deals in healthcare services has improved since the start of 2023.

Panchel added: “We’ve historically supported service providers in all parts of the healthcare ecosystem with a particularly strong history in social care and consumer healthcare. Life sciences and healthcare technology are areas we are increasingly looking at.”

One of the draws of private equity to some sub-sectors within healthcare is that certain revenues are indirectly government-backed. For example, Livingbridge-backed UK elderly care business Helping Hands has clients that are subsidized by the local government if they are unable to meet the costs of full-time care themselves.

Healthcare’s complications

Livingbridge’s Panchel also identified a number of challenges that come with investing in the sector, including staffing.

“Staff is an issue across healthcare,” he said. “What we focus on in our companies is really making sure they have the best employer in the market in terms of how they look after their staff, and how we treat them—making sure it’s a good place to work.”

Disputes over pay and conditions among medical workers have flared up across Europe. For the most part, particularly in the UK and Italy, industrial disputes have been limited to the public sector. However, because many medical professionals are trained in the public sector, the labor issues can spill over into the private sector.

INVL’s Drobavičius says his firm’s company Inmedica is considering developing its own solutions to potential staffing issues by starting a nursing college to train its own staff.

Another hurdle for PE firms is securing finance for large healthcare deals. A notable example is KKR’s aforementioned €3 billion takeover of Ivirma in 2022. The deal ran into difficulties when Morgan Stanley and Credit Suisse gave up their financing of the deal. The deal was eventually completed after private credit funds took over the financing.

As such, some investors are finding it easier to source deals and potential exits in the mid-market. INVL’s. Drobavičius described how Inmedica is now receiving interest from both strategic and private equity investors in Europe due to its market position following consolidation.

“If you want to be interesting, you have not only to be present in the market, you have to be the clear number one,” said Drobavičius, who explained his firm is looking to exit the business by around 2025.

Mid-market-focused Livingbridge could also be eyeing an exit. It is reported to have hired PwC to advise on the sale of Helping Hands, although Panchel would not comment on the firm’s exit strategies.

Featured image by Maksym Dykha/Shutterstock

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