Riverside taps two for expanding healthcare focus

Middle-market focused private equity firm The Riverside Company has hired two long-time healthcare industry veterans to advise the firm as it devotes more attention to the burgeoning healthcare sector.

Former MultiPlan president Harvey Sigelbaum and MB Healthcare Partners director Joseph Ibrahim have joined the firm’s New York office as a senior advisor and principal, respectively.

Although Riverside will stay true to its roots as a generalist investor in small businesses valued under $150 million (€101 million), the firm has taken an increasing interest in the healthcare sector, making four major acquisitions in the sector over the last 12 months.

“I wish I could tell you we were geniuses and forecasted the growth of healthcare and got in on the ground floor,” Riverside co-chief executive Stewart Kohl told PEO. “We backed into it, we did one deal and it worked and we did another and another, and along the way we did start to get smart and say to ourselves this is a very significant, important growing part of GDP around the world.”

Prior to joining Riverside, Sigelbaum served as president and co-chief executive of MultiPlan, one of the

Stewart Kohl: expanding Riverside's healthcare focus

health care preferred provider organisations (PPOs) in the US.

From his tenure with MultiPlan, Sigelbaum has a unique perspective on private equity healthcare investing, having steered Mulitplan through General Atlantic’s minority investment in the company in 2004.

He has also has a very active history in healthcare industry associations and lobbying groups, including executive positions on the America’s Health Insurance Plans and the Council for Affordable Quality Healthcare. Riverside hopes to leverage his contacts throughout the industry for deal origination and operational talent.

Sigelbaum’s network was instrumental in Riverside’s acquisition of Summit Medical, a UK-based supplier of disposable orthopedic and infection-control products. Sigelbaum has also brought some of his contacts within the industry to sit on the board of directors of Riverside’s portfolio company.

“Even in the case of already existing investments that were in healthcare, I was able to recommend individuals that I thought would be excellent additions to the board of the companies.”

Ibrahim will focus on originating deals for the healthcare portfolio. Prior to working with Florida-based MBF Healthcare Partners, Ibrahim was vice president of healthcare financial services at GE Capital, and before that director of corporate development at Cardinal health.

Riverside’s initiative comes at a time when many private equity firms are treading very carefully around the healthcare space, fearing significant regulatory changes to Medicare and other programs after the election of a new US president.

Asked whether Sigelbaum’s network would veer the firm more towards insurance-related targets within the healthcare sector and thus expose Riverside to more regulatory-related risk, Kohl responded: “Anybody who is going to be an investor in healthcare is and must be acutely aware of legislative and regulatory changes. We monitor them carefully, we think about how what’s possible or likely and we think about what impact that would have on companies we already own and what companies we may buy.”

Ibrahim added that the firm would distance itself from the sectors where regulatory change might most negatively impact potential portfolio companies.

In related news, Avista Capital Partners has appointed Patrick O’Neill, formerly the head of research and development at Johnson & Johnson, as a healthcare industry adviser.