OMERS back to growth mode with deal pipeline running fast

SEC's Gensler talks PE transparency and Five Arrow's Stepping Stones hits the market.

Happy Friday!

After a challenging 2020, OMERS Private Equity returned to growth mode this year, working a post-covid deal pipeline “as full as it ever has been,” global head Michael Graham told Buyouts’ Kirk Falconer.

Investing to date this year, totaling C$1.6 billion ($1.3 billion), represents “slightly above average” activity for OMERS, Graham said. The “velocity of deals,” however, amounts to “one of our biggest years yet.”

Going after those assets it believes it has “the right to own”, one of three new platforms in the first half of the year included Gastro Health, a Miami-based gastroenterology physician practice management company acquired from Audax Private Equity at a TEV of roughly $950 million, I wrote.

Gastro Health checks a number of boxes for OMERS’ PE strategy. For one, it resides in a resilient, non-cyclical sector that has long been a specialty. In addition, Gastro Health’s preventive care focus received a lift during the health crisis that should power expansion in the years ahead. “We want to get behind that macro trend,” Graham said.

Once OMERS has gained ownership of assets like Gastro Health and TurnPoint Services, the goal is to “drive hard,” Graham said. “We take companies with EBITDA of $30 million to $70 million and grow them into companies with EBITDA of $100 million to $200 million.” OMERS Growth Equity, launched in 2019, also closed on a number of deals this year — upping its tech exposure.

A busy year of dealmaking came amid the recent loss of several employees, including head of healthcare Tim Patterson, who left in January. Patterson subsequently launched a lawsuit, claiming he was terminated “without just cause.” The litigation took aim at compensation practices, asserting they were behind many of the departures.

While declining to comment on the suit, Graham acknowledged the “more than average turnover.” OMERS, on the other hand, will have “no trouble hiring” to fill the positions, he said.

Check out Kirk’s full report on Buyouts.

That’s it for me! Have a great weekend, and as always, write to me at springle@buyoutsinsider.com with any tips, comments or just to say hello.