Wednesday, September 18, 2013

Investing heavily

Global Healthcare Private Equity Report 2013

Healthcare represents about 10% of global private equity in general. Since this is more or less the proportion of health expenditures on the GDP would sound normal. However, since more or less two thirds of this expenditure is public in western countries, we can say that currently private equity may be overweighted in health sector, compared to others. The reason is that private equity may expect better returns in healhcare than in other parts of the economy.
Anyway, if you are interested in the details of what's going on, I suggest you to have a look at: Global Healthcare Private Equity Report 2013.
A key message about who is investing and where:
One clear theme that emerged in 2012, however, was the growing level of private equity firms’ interest in healthcare in China, India and across the Asia-Pacifi c region (see Figure 3). With opportunities abounding and restrictions on foreign direct investment relaxing to some extent, Western funds are building up their presence in Asia-Pacifi c by opening new offi ces, especially in China and Southeast Asia. Over the next several years, deal activity is likely to continue heating up in new geographies as it stabilizes in traditional ones.
Despite the allure of new markets, Western investors face a healthy dose of competition from local investment firms that have already taken root in the regions and strategic players searching for new outlets for growth. At the same time, investors based in the Arabian Gulf region (including sovereign wealth funds) are also investing heavily in emerging markets, with the long-term goal of bringing much-needed healthcare solutions back to their home countries. Given their unconventional investment theme, such investors are often willing to accept lower returns, consequently bidding up valuations across the board.
I always say that if you want to know about the future, it is helpful to have a conversation with a private equity investor and a headhunter. Capital and talent drive the economy, and both are interested in the appropriate allocation of risk and reward.

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