GHO Capital’s biggest European healthcare fund in context

Specialist healthcare manager GHO has raised €975m for its second vehicle, the largest-ever European fund dedicated to healthcare and life sciences.

GHO Capital Partners raised the largest Europe-focused healthcare fund this week with a €975 million haul for its sophomore vehicle.

GHO Capital II was oversubscribed and is almost 50 percent larger than its 2014-vintage, €660 million predecessor. Capital raised from the vehicle will back healthcare sub-sectors including outsourced services, pharma and medtech through growth buyouts, according to a statement detailing the fund’s close.

Healthcare and biotech focused funds in Europe have raised $5.3 billion from 2010 to the third quarter of this year, according to PEI data. GHO’s second fund dwarfs the previous second-largest healthcare fund in Europe, Medicxi‘s third fund which raised €400 million in July.

London-headquartered G Square, which invests in buyout and growth, raised €350 million for its second healthcare fund, while French firm Andera Partners, which backs companies developing therapeutic products and medical technologies, raised €345 million for BioDiscovery V.

As Europe’s economy slows, the perceived safety of the healthcare industry has continued to attract investor interest, Bain & Co noted in its Global Healthcare Private Equity and Corporate M&A Report 2019.

Retail health played a prominent role during the year as investors expanded their assets through buy-and-build strategies, including veterinary and dental services, Bain noted.

Interest in biopharma, meanwhile, is driven by renewed interest in prescription generics and over-the-counter drugs.

“Despite political pressures on pricing, investors have a solid understanding of pricing dynamics in Europe. Opportunities abound to acquire non-core assets from large corporates looking to rationalise their portfolios in order to fund their own drug pipelines,” the report noted.

Regulation could significantly affect the healthcare sector in Europe in the long-term. Germany is considering a series of reforms including tariffs for hospital finance and regulatory requirements for running retail health chains. At the same time, Brexit could lead to a potential shortage of healthcare workers, and reforms in medical devices research and development could drive up prices, Bain noted.