Francisco Partners predicts increased carveout opportunity; EQT relishes renewable energy deals

EQT gets bullish about renewable energy.

Good morning dealmakers! Aaron here, wishing you a happy tech Thursday.

Today we are going to look at a recent carveout by one of the firms that specializes in that strategy and how tech is driving opportunity in healthcare.

Then we have one firm that is certain that renewable investments will thrive in a tight macroeconomic environment.

And finally, we’ll have a sneak peek at some outlooks into the healthcare sector for 2023. Let’s get to it!

Consummate carveouts. Private equity firms may be hunting potential carveout opportunities this year as big companies shed non-core assets and tighten their finances amid the uncertain economy.

Francisco Partners is looking at such deals.

“The current challenging macro-economic environment coupled with corporates that are focused on how they can improve shareholder value (e.g., slimming down portfolios and/or refocusing strategy) will result in a lot more divestiture activity,” said Justin Chen, partner at FP. “We are having a lot of these conversations across the landscape.”

Toward the end of last year, the San Francisco-based firm, which specializes in carveouts and has completed 50 since inception, purchased bswift, a provider of benefits technology and services, from CVS.

Firms are on the lookout for companies that leverage technology to increase efficiency and save employees time, especially in the changing landscape of healthcare.

“Covid helped accelerate an existing trend of employers focusing on the holistic relationship with their employees,” said Chen. “We’ve seen companies expand their definition of ‘benefits,’ which historically focused on health insurance selection, but now includes other adjacent areas, such as financial products, wellness and health services.”

You can read the whole story here. 

Renewable revolution. The rising demand for renewable energy is creating vast opportunities for investors that outweigh the impact of the tight macroeconomy, according to one firm.

Obey Martin Manayiti spoke with Alex Darden, partner and head of EQT Partners’ US infrastructure platform, about his firm’s recent investment in Madison Energy Investments, a developer of distributed generation assets. This investment comes at a time when there are growing fears of a recession that could affect the operation of renewable projects and slow the pace at which projects can be brought online.

Darden said that even though there is need for significant capital for renewable investments, “there will be limited impact” because the demand for such investments goes beyond the current economic malaise.

The EQT partner said opportunities within the energy transition are rooted in the US’s desire to wean its grid from traditional energy sources such as coal, which is one of the biggest emitters of carbon dioxide.

With rising demand for gas driving electricity prices up, Darden said “the economics for distributed generation solar and storage are becoming more favorable.”

You can read the whole story here. 

Healthcare heartbeat. I wanted to take the opportunity to tease out my series of outlook pieces for the healthcare sector that should be coming out next week. I will get predictions and thoughts from various healthcare investors, so stay tuned!

I hope everyone is having a good start to the new year. Are you preparing for a busy Q1? Or are you sitting back and waiting till Q2? I would love to hear your thoughts on deal pipelines, activity levels and where you are looking for opportunities. I would love to chat and catch up or introduce myself if we have not already chatted before. Feel free to reach out to me at aaron.w@peimeida.com and I’m looking forward to hearing from you!

That is a wrap for today. I will be back tomorrow for the first Fri-yay edition of 2023. Until then…

Cheers,

Aaron