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Private Equity Fund Managers Investing in the Healthcare Sector – March 2015

by Allison Polchinski

  • 19 Mar 2015
  • PE

Private equity investments in the healthcare industry have increased significantly over the past five years; the aggregate value of funds raised with healthcare as part of their focus has more than doubled from $61bn in 2011 to nearly $130bn in 2014. Preqin’s Fund Manager Profiles online service shows that the majority of the funds raised that included healthcare as an investment preference were raised by North America-based managers, and represent 62% of total funds raised in the last 10 years. This is more than double the amount raised by mangers based in the next most successful region, Europe, which raised 25% of total funds raised in the last 10 years.

Venture capital managers dominate the sector in terms of number, with over 1,800 venture capital firms worldwide including healthcare as an investment preference; representing 51% of all fund managers active in the healthcare sector. However, as can be seen in the chart above, venture capital firms account for only 15% of total funds raised in the past 10 years. This compares to buyout firms, which were responsible for 61% of total funds raised over the past decade in this industry sector. Growth and balanced strategy firms contributed 8% and 7% respectively.

Of the 20 largest firms investing in healthcare by total funds raised, 13 utilize a buyout strategy, while only one firm is venture capital-focused. This could be a result of a larger number of small venture capital firms investing in healthcare competing against larger, established buyout firms who include healthcare as part of a much wider industry focus. By region, 13 of the 20 largest managers by funds raised in the last 10 years are headquartered in North America, with the remaining seven located in Europe. The largest manager by funds raised in the past decade is Carlyle Group, based in the US, which focuses on buyout investments on a global scale.

Although the full effects of the Affordable Care Act are still not clear, private equity fundraising in the healthcare sector looks set to remain strong, with 462 funds currently on the road seeking a combined $118bn.

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