Kindred takes the lead as 2017’s largest PE bet in healthcare

  • Top deal of 2017: TPG, WCAS and Humana’s $4.1 bln deal for Kindred Healthcare
  • Broad range of subsectors see significant dollar volume
  • Notable investors include: KKR, TPG, Bain, Pamplona, New Mountain Capital, Carlyle and Softbank

A competitive and pricey market didn’t stop the private equity community from writing big equity checks in the healthcare sector during 2017.

According to Thomson Reuters’s count, the complex $4.1 billion take-private for home-care giant Kindred Healthcare by a pair of bulge-bracket firms and one of the nation’s largest insurers, announced just days ago, took the No. 1 spot in terms of value.

Importantly, much PE activity isn’t publicly disclosed, while other notable trades didn’t meet the data service’s criteria for the list.

One of those not included but worth mentioning is New Mountain Capital’s take-private of VWR International, the lab-products distributor backed by Madison Dearborn Partners. The deal, purchased through New Mountain platform Avantor, was valued at a hefty $6.4 billion.

Pharma services also produced its share of megadeals. Pamplona Capital in June agreed to take CRO Parexel private in a $4.5 billion transaction, the same month Carlyle and GTCR shelled out $922 million for Albany Molecular.

KKR was also involved in billions of dollars of healthcare activity, including a $2.4 billion deal for American Medical Response, the ground ambulance unit of Envision Healthcare. The buyout group bought AMR through an existing platform, Air Medical Group Holdings, creating the nation’s largest provider of medical transportation.

In other billion-dollar activity reported by Buyouts, Carlyle earlier this week bought a majority stake in TA Associates-backed workers-comp firm MedRisk in a $1.2 billion-plus deal. Also reported first by Buyouts, Ares Management in August invested in Summit Partners-backed multispecialty physician group DuPage Medical Group, a deal valued at $1.45 billion.

Here’s Thomson Reuters’ list of private equity’s five largest investments this year in U.S. healthcare companies, as of Dec. 21:

1. TPG Capital, Welsh Carson Anderson & Stowe and Humana teamed up to take Kindred Healthcare private in a complicated three-way deal valued at about $4.1 billion. The transaction is poised to create two separate companies. TPG & WCAS will own a combined 60 percent stake in Kindred at Home, the home health and hospice business, while Humana will own the remaining interest. The pair of PE firms will wholly own and separately operate Kindred’s specialty hospital business.

2. Japan’s Softbank, through its $100 billion Vision Fund, injected $1.1 billion in Roviant Sciences, with the vision of launching new subsidiaries within and beyond the biopharma industry. While Roviant made the Thomson Reuters list, the deal is considered more of a financing round — possibly the largest single investment that biotech has ever seen — as opposed to a traditional PE buyout.

3. TPG Capital struck more than one big deal in healthcare this year, agreeing in October to take medical-device maker Exactech private in a deal valued at about $737 million.

4. RiteDose, known for its blow-fill-seal manufacturing and packaging of drugs, was taken private by a consortium led by China’s AGIC Capital for $605 million. The seller was Olympus Partners.

5. In another widely talked about deal, Bain Capital bought out H.I.G. Capital’s stake in publicly traded Surgery Partners for about $503 million. Notably, the new funding was used by Surgery Partners to acquire National Surgical Healthcare from Irving Place Capital for about $760 million.

Action Item: Read more about the hot pharma services market that fueled healthcare activity through the summer:

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