Bain Capital’s Devin O’Reilly on healthcare themes; Sycamore Partners loses co-founder

Morning!

This is Chris, on the Wire this morning. What are you seeing out there?
Healthcare: Devin O’Reilly, managing director of PE and North America head of healthcare at Bain Capital, talked about the themes the firm is following.

Those themes include value-based care; helping pharma companies accelerate development of innovative therapeutics; and the evolution of healthcare IT, writes Aaron Weitzman on PE Hub today.

“We take a very thematic approach to healthcare investing,” O’Reilly said. “Every year, we map out the six or seven themes we are going to be investing behind for the next six to 18 months. We then seek to develop relationships with, and perspectives on, companies that are relevant to those themes.”

Bain Capital also has a longer hold period horizon than some of its peers, with an average hold period over six years, O’Reilly said.

“This is because we’re looking for businesses where there’s some type of inflection point, not businesses that are aiming to maintain the status quo.”
Bain is “not in the market to quickly flip businesses.”

“We are looking to partner with companies and accelerate their growth journeys at points of inflection. Our hold periods tend to be longer, and we’re very patient in that regard,” says O’Reilly.

Read the full piece here on PE Hub.

Waiting: What’s your view on second quarter valuation marks, will they reflect the reality of the market or will GPs continue to hold the line around “flat to up” as was the case with first quarter marks?

I’ve had mixed views on this. And of course it’s hard to generalize about industry performance, when the truth is that GPs will make valuation decisions on a case-by-case basis. But, LPs have been slightly frustrated with Q1 private equity marks that generally looked strong compared to the wider economy, which have helped exacerbate imbalances in their portfolios.

Many are waiting for Q2 marks to temper some of the imbalance, as their private equity holdings have rocketed to larger percentages of their overall portfolios as public stocks have declined. Whether GPs choose to take some pain in Q2 is an open question. Many GPs are fundraising and it’s unlikely they’ll mark investments significantly down as they try to attract capital from LPs.

“GPs don’t want to show a lot of weakness as they’re fundraising,” according to an LP I spoke to recently. What do you think? Will Q2 marks reflect the pain in the broader market, or will GPs hold the line on “flat to up” performance? Hit me up at cwitkowsky@buyoutsinsider.com.

Moving on: One of the two founding partners at Sycamore Partners, Peter Morrow, left the firm earlier this year, sources told Buyouts. It’s not clear what prompted the break-up, but sources say Morrow will be looking to start his own firm.

Sycamore was expected to come back to market with its next flagship next year, sources told me. It’s not clear if Morrow’s departure has changed that timetable. Sycamore closed its last flagship, Fund III, on $4.75 billion in 2018.

I don’t know if Morrow’s departure triggered a key-person event in the active funds. Hit me up if you have any additional info. And read the full piece here on Buyouts.

That’s it for me! Hit me up with tips n’ gossip, feedback or books rec at cwitkowsky@buyoutsinsider.com or over on LinkedIn.