Andrea Auerbach: Private company valuations are on the local train; plus, TPG backs Monogram Health

Monogram Health scores $375 million from backers that include TPG.

Good morning dealmakers! Aaron Weitzman here on the Wire.

Several healthcare deals have been announced this week. We’ll take a quick look at some in just a moment.

But first, we’ve got a new segment of our ongoing Q&A series.

Waiting game. To gain insights on the current climate for private equity deals, PE Hub and PE Hub Europe reporters have been asking a wide range of sources to share their outlooks for 2023.

Today, we’re featuring PE Hub editor-in-chief MK Flynn’s interview with Andrea Auerbach, head of global private investments at Cambridge Associates.

“The first six months of 2023 may be eerily similar to the last six months of 2022 in terms of deals done and pace,” Auerbach said. “There are too many factors in motion at the moment to jumpstart overall transaction volume, particularly for new platforms. That said, the public-to-private trend will continue and portfolio company add-on activity will persist.”

Here’s more from the interview:

What will be the most important trends affecting dealmaking in 2023?
There is an expectation that 2023 will be a great year to deploy capital, provided there is price capitulation by sellers. While the public market has been on an express train to correction, private company valuations are on the local train and could take potentially another year to fully reflect the impact of broader macroeconomic factors.

Given the micro nature of private equity investing, valuations often reflect the specific expected impact of factors on the company in question. For example, sustained inflation creates headwinds for businesses that do not have pricing power or are beginning to reach the outer limits of their pricing power; higher interest rates impact the use or effects of leverage, etc. Different sectors and different strategies may be more or less affected, so there will be pockets of productivity from a deal perspective.

Given current market conditions, areas of increasing investment interest to LPs include funds focused on more defensive industry sectors or sub-sectors, special situations, private credit and secondaries. LPs are revisiting and re-assessing GP operating capabilities as well.

You can read the whole story here.

Healthcare heartbeat. And now let’s explore some recent healthcare deals.
Monogram Health, a value-based specialty provider of in-home evidence-based care and benefit management services for patients living with polychronic conditions, received a $375 million growth capital raise to help support continued expansion.

The money raised came from various investors, including CVS Health, Cigna Ventures, Humana, Memorial Hermann Health System, and SCAN, as well as from both new and existing financial investors including TPG Capital, Frist Cressey Ventures, Heritage Group, Pura Vida Investments, and Norwest Venture Partners.

“Monogram is bringing an innovative, integrated approach to in-home care delivery that is increasing access and engagement, lowering cost, and driving better outcomes for patients managing chronic kidney disease,” said Todd Sisitsky, president of TPG and co-managing partner of TPG Capital.

Separately, Q Healthcare Partners (formerly called NovaQuest Private Equity, announced it has invested in COPILOT, a “digital-first” patient-centric reimbursement hub services platform intended to support the relationship between patients, healthcare providers and pharmaceutical and device manufacturers.

“Fast and efficient reimbursement support services are critical in the growing specialty drug market to help patients get access to much needed treatments,” said Michael Sorensen, partner at QHP Capital. “COPILOT fits perfectly with QHP’s investment focus of providing strategic capital to firms capable of scaling to meet the needs of the industry. We look forward to supporting the COPILOT team as they continue to innovate and expand in the hub services market.”

Speaking of healthcare, I know a lot of investors are out in San Francisco for the JPM healthcare conference. If you’re attending, I’d love to hear from you. Feel free to reach out to me at aaron.w@peimedia.com.

Environment, health and safety. Another deal announced today that caught our collective eye: New York-based Bregal Sagemount made a strategic growth investment in Enhesa, a provider of regulatory and sustainability intelligence, in a deal covered by PE Hub Europe’s Nina Lindholm.

As part of the transaction, Sagemount will acquire ICG’s minority stake in Enhesa, with existing investor CGE Partners retaining its majority stake in the company. Enhesa has its global headquarters in Brussels and its US headquarters in Arlington, Virginia.

“We see tremendous growth ahead for Enhesa as a result of the company’s strong product-market fit and tangible customer ROI,” said Pavan Tripathi, partner at Sagemount. “Enhesa has an impressive track record of consistently retaining and growing its customer relationships as well as expanding new content offerings and jurisdictional coverage through both organic and inorganic growth initiatives.”

You can read the whole story here.

That is a wrap for today. Chris Witkowsky in on deck for tomorrow, MK Flynn will be with you on Thursday, and I will be back on Friday as per usual. Until then…

Cheers,

Aaron