Cinven eyes asset-light healthcare

With Cinven’s sixth fund nearing a €7 billion close, Private Healthcare Investor caught up with healthcare team principal, Matt Norton, looking for clues on where it is hunting down its latest healthcare deals.

Cinven’s healthcare principal Matt Norton believes the group’s move away from “asset-heavy” healthcare services, towards “asset-light” medtech and pharmaceutical firms can give it an edge over more generalist rivals looking to invest in healthcare.

Norton explained the transition since the group began investing in the space three decades ago: “Across our last two funds we invested around 30 per cent in healthcare, compared to the broader private equity market in Europe, where healthcare represents less than ten per cent.

“Over the 30 years, we have gradually transitioned toward more technical, asset-light companies which has led toward more activity in the medtech and pharma space, and away from the single country healthcare services deals that we focused on in the 1990s and early 2000s.

“Given the more technical nature of [these industries], I believe Cinven’s sector focus model gives us a competitive edge over more generalist PE firms.”

The firm currently has three active healthcare investments, all in its 2012 €5.3 billion fifth fund: US CRO specialist Medpace, leading European laboratories business Synlab, and a residual stake in pharmaceuticals firm AMCo.

Labco and Synlab were acquired last year and merged to form Synlab, the largest clinical laboratory services company in Europe. Norton explained why the sector will remain attractive: “A core part of the thesis behind our investment in the clinical labs space was to accelerate the consolidation of the European market. In the US, the top two players have a market share of about 45-50 percent, while in Europe that is below 10 percent, so it’s still a massively fragmented industry.”

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