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Global Private Equity Institutional Investors Drawn to the Healthcare Industry – May 2015

by Joseph Borda

  • 06 May 2015

The global healthcare industry, an aggregation of sectors within the economic system ranging from goods and services for patient treatment to advanced technologies, such as medical devices and treatment advancements, continues to be an attractive industry for private equity investment as it has shown steady growth amid increasing pressure to cut costs. According to Preqin’s Investor Intelligence database, there are currently 2,336 global investors that have invested in or will consider targeting the healthcare industry. Of these LPs, the majority are based in North America and Europe. North America-based investors account for 56% of healthcare investors, whereas Europe-based LPs account for 27%. Asia- and Rest of World-based investors represent 10% and 7% of LPs respectively. These institutional investors have aggregate assets under management of approximately $66tn. 

Private sector pension funds, foundations and public pension funds make up the largest groups of global institutional investors that have previously invested in, or currently show an interest in, the healthcare sector, accounting for 15%, 14% and 12% of LPs respectively. Fund of funds managers and endowment plans follow closely, making up 10% and 8% of investors in the industry respectively. 

Preqin data illustrates that the majority of investors in the industry seek investment opportunities in North America (72%) and Europe (68%); this is unsurprising given that the majority of healthcare investors are North America- and Europe-based LPs. However, the healthcare industry is in need of investment worldwide, and although Asia and economies outside North America and Europe represent only 10% and 7% of investors respectively, 53% of LPs show interest in opportunities in Asia and 26% seek opportunities in economies outside North America and Europe.

Dubai-based corporate investor, A1 Group, is planning to commit up to $500mn across three to five new private equity funds in the next 12 months. The firm will be targeting funds in the healthcare sector, along with other industries. Another LP targeting the healthcare sector over the coming year is China-based private equity fund of funds manager Magic Stone Alternative Investment, which targets domestic investment opportunities within the sector.

The global healthcare sector will continue to be an attractive industry for investment opportunities as it is a mainstay of advancement and development that affects many aspects of our lives. From treatment care to research and development, the healthcare industry will continue to be a viable option for LP investment opportunities.

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