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General Atlantic eyes inefficiencies in healthcare; and Palladium hires trio to invest in lower middle market

Donohoe exits KKR and three join Palladium.

Happy Friday, Hubsters.

MK Flynn here, with today’s Wire.

With all that’s going on in the world – the threat of Russia invading Ukraine, steep losses in yesterday’s stock market and more concerns about rising inflation – the private equity business feels like a relatively safe haven this morning.

Spotlight on healthcare. Here at PE Hub, we’ve been focusing on the healthcare sector. Earlier in the week, we launched a new series, profiling PE firms investing in healthcare and featuring conversations with investors.

Earlier this morning, we published Aaron’s look at General Atlantic’s healthcare strategy.
“Healthcare is 20 percent of the economy, and we believe it is economically resilient, hyper-fragmented and behind in tech adoption,” said Robb Vorhoff, managing director and global head of healthcare. “And increasingly, people want to be involved in something that has a real impact and changing the world for the better. All of that makes healthcare very attractive for the investment community.”

As Aaron reports, General Atlantic focuses on key themes in healthcare, including: Value-based care enablement (with portfolio companies including Stellar Health, Equality Health and Oak Street Health); virtual care and care navigation (Vida Health, Conexa and Included Health); and behavioral health (Marathon Health and Alignment Healthcare).

“Virtual care was tiny before the global pandemic, but there is an enormous number of players now,” Vorhoff said. “That industry is getting to the next stage of maturation, and we believe there will be a big consolidation trend in that space.”

And in case you missed it, check out Aaron’s previous story on Silversmith Capital Partners, featuring his conversation with Jeff Crisan, co-founder and managing partner. “Healthcare is 20 years behind where the financial services sector is, for example,” Crisan said. “I think of how painful banking was in the 1980s and 1990s and how tech has transformed and makes things smoother, and healthcare has not changed a whole lot. There’s no reason it has to be that way.”

In this week’s people moves…

Comings and goings. Suzanne Donohoe, who led the creation and growth of KKR’s client and partner group, has decided to leave the firm, according to an internal memo seen by Buyouts and reported by Chris. Donohoe will leave for a new opportunity in March after a transition period, and she will remain a senior adviser to the firm. The departure was described as amicable, according to a person with knowledge of the firm. Donohoe, who joined the firm in 2009, moved out of the client and partner group in late 2020 and into a new role as head of strategic growth. She co-chairs the firm’s Inclusion & Diversity Council, of which she was a founding partner in 2014, as well as serving on the Investment Heads Committee.

Meanwhile, Katherine Lehman, Edwin Moss and David MacDonald have joined Palladium Equity Partners, known as the oldest minority-owned private equity buyout firm in the industry with over $3 billion of assets under management. Lehman comes aboard as partner, Palladium Heritage, and will lead the investment team. Moss joins as managing director and MacDonald as principal. The trio worked together previously at Lincolnshire Management. Focused on the lower middle market, they will target business-to-business and industrial companies with EBITDA below $12 million. “We believe that their collective experience and value-oriented investment approach presents a unique, synergistic opportunity for the firm,” said Marcos Rodriguez, chairman and CEO.

And, Jonathan Belair, a one-time OMERS Private Equity executive, set up his own PE shop with a focus on disruption in the food industry, Buyouts has learned. As Kirk reports, Belair founded Lios Partners last year to make control and minority investments in North American mid-market companies operating across the food value chain, according to the firm’s website. It is not known when or if a debut fund will be launched.

If you’re looking for some weekend reading, check out my series of Q&As with private equity luminaries, including:

*Pam Hendrickson, vice-chairman of The Riverside Company
*David Grain, founder and CEO of Grain Management
*Beatrice Mitchell, co-founder and managing director of Sperry, Mitchell & Co.

Long weekend. We’re off on Monday for President’s Day so, but we’ll be back on the Wire Tuesday morning. I hope you have a nice weekend, whether you’re hitting the slopes or curling up with a good book and a hot cup of cocoa.

Cheers,

MK