Hellman helps General Atlantic double down on health deal

The two US firms have backed a $575 million deal that combines two sectors with strong growth projections and plenty of private equity interest: electronic payment processing and healthcare.

Fifteen months after paying $1.2 billion for a 52 percent stake in Emdeon Business Services, General Atlantic has joined with Hellman & Friedman in purchasing the remaining 48 percent of the company from Nasdaq-traded HLTH Corporation.

The global private equity firms paid $575 million (€397 million) for HLTH’s minority interest in the healthcare-focussed transaction services provider, which HLTH said resulted in proceeds of approximately $1.8 billion. A General Atlantic spokeswoman declined to give further specifics as to the deal’s structure.

Emdeon is addressing the growing demand among healthcare constituents for electronic payment and remittance solutions.

Tracy Bahl

The transaction was led by Jonathan Korngold, head of General Atlantic’s healthcare investing team, and fellow managing director Mark Dzialga, both of whom already sit on Emdeon’s board. They will be joined by Hellman & Friedman managing directors Allen Thorpe and Philip Hammarskjold.

Tracy Bahl, a special advisor to General Atlantic’s healthcare team and former chief executive of UnitedHealth group subsidiary Uniprise, has been named chairman of the board and will work closely with the company to “pursue its strategic growth objectives”, the firm said.

Bahl noted in a statement: “Emdeon is addressing the growing demand among healthcare constituents for electronic payment and remittance solutions as payers and providers seek to reduce paper and improve the overall speed, accuracy and efficiency of billing and payment administration.”

Both the healthcare industry and the electronic payment processing sector have been tagged for growth and attracting high levels of interest from private equity firms.

Hellman & Friedman and General Atlantic are both long-standing healthcare investors, but this is the first time the two have teamed up on a deal in the sector.

They previously partnered on Upromise, a college savings plan company that raised roughly $118 million in various financing rounds from firms including Charles River Ventures, General Catalyst Partners and Kleiner Perkins Caufield & Byers. Upromise was purchased for an undisclosed amount in June 2007 by Sallie Mae, the student loan giant at the center of a failed $25 billion buyout led by JC Flowers.

Greenwich, Connecticut-headquartered General Atlantic was founded in 1980 and manages roughly $17 billion in capital, while the San Francisco-based Hellman & Friedman has more than $16 billion under management. Founded in 1984, Hellman & Friedman is currently investing out of its sixth buyout fund, which closed on $8.4 billion in May 2007. General Atlantic has an evergreen capital structure.