Today we’re talking growth investing – one area of the market that has remained active through the pandemic.
On the heels of back-to-back November 2020 investments in Argenta, an animal health pharma services firm, and newly-formed medical-device platform Zeus Health, I “sat down” virtually with Ali Satvat, who co-head’s KKR’s healthcare industry efforts in the Americas and leads the firm’s first-ever Healthcare Strategic Growth Fund.
Here’s a quick preview of my Q&A with Satvat:
How is the growth side of the market positioned amid both the health crisis and incoming change in administration?
“The [covid] challenges are real, and so the benefit of the investments that we have in this Healthcare Growth Fund is we haven’t had a lot of exposure to leverage. We didn’t have a bunch of companies that had issues on debt; we didn’t have a bunch of companies that have issues on liquidity.
While we are very mindful of policy and keep a very watchful eye from state and local [perspectives], the vast majority of what we’re doing in growth has a bipartisan element to it. We really are trying to avoid stroke-of-the-pen risk. If we do our job well, we’re looking for secular growth businesses across the healthcare landscape where we think we’re delivering good value and good outcomes to the system. If we do that, we are largely insulated from the vagaries of policy.”
In my full interview with Satvat, the investor, among other things, digs into the firm’s strategy of backing “repeat themes and teams” such as Zeus CEO Duke Rohlen – whom the firm has now partnered with for its third time in a platform capacity. Read it here on PE Hub.
Growth-tech: As it relates … tech scoopster Milana Vinn recently caught up with several growth-tech investors including Satvat’s colleague, Jake Heller, co-head of KKR’s Technology Growth team in the Americas, along with senior members of firms including Accel-KKR, General Atlantic, Permira and Spectrum Equity.
While some firms have ridden the wave of high-growth end markets reaping the benefits of the move to digital, others have chosen to double down on the sustainable business model of recurring revenue. A few even turned to segments that fell out of favor during the crisis, taking advantage of lower valuations and betting on pent-up growth once markets recover.
“I think where we are spending our time is a bit different than a lot of other investors, who are still primarily investing around the popular themes, which is collaboration, e-commerce, video conferencing,” Tom Barnds, managing director at Accel-KKR told PE Hub. The software focused firm prefers investing in areas set to experience growth in a year or two, after the market recovers.
“These are all great areas, but that’s not a secret. A lot of the money is going into those themes, and valuations for a number of those companies have risen quite sharply in a short period of time.”
That’s it for me today. As always, write to me at firstname.lastname@example.org with your tips, comments or just to say hello!
Note to Readers: It’s that time of year … for the 21st time, the editors of PE Hub and Buyouts honor exceptional buyouts with our Deal of the Year Awards.
Winners are chosen in seven categories: Deal of the Year, Large-Market Deal of the Year, Middle-Market Deal of the Year, Small-Market Deal of the Year, Turnaround of the Year, International Deal of the Year, and Secondaries Deal of the Year.
Go here for more information and to read about rules and methodology. Also check out past winners. Last year, New Mountain took the crown with its exit of Equian.
If you have additional questions, email Private Equity Editor Chris Witkowsky at email@example.com.