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‘Superb’ earnings drove EQT’s price for BPEA; plus HGGC’s Fullscript buys Emerson

HGGC-backed Fullscript acquires Emerson Ecologics and the spotlight continues on top women in private equity.

Good morning, Hubsters.

MK Flynn here with today’s Wire. In honor of my Irish ancestors, I wish you a Happy St. Patrick’s Day!

Now onto private equity news.

Investing in Asia. I enjoyed talking yesterday with EQT CEO Christian Sinding about the Stockholm-based firm’s acquisition of Hong Kong-based Baring Private Equity Asia. It was interesting to hear how the deal came about – and why EQT paid $7.5 billion.

It all began with friendly chats between Jean Eric Salata, the CEO of BPEA, and Thomas von Koch, chairperson of EQT Asia, about the process of going public.

“We realized that they were thinking about going public, actually,” EQT’s Sinding told me. “The real story is that Jean, the founder of BPEA, called my buddy Thomas and he said, ‘Hey, what are the key learnings from your IPO? What were you guys thinking about? What were the best practices?’ And that basically started the conversation: ‘Are you really sure you want to go public? Shouldn’t we rather create one of the leading firms in the world in what we call active-ownership strategies?’ So we got together very quickly thereafter. Jean and I have spent lots and lots of time together, and we’ve done that across teams and across sectors – from capital raising through central functions – and we realized we have an incredibly good strategic and cultural fit, in addition to the investment side. We realized it was kind of a no-brainer. And we started those discussions in the fall.”

Private Equity International’s Rod James joined the call, and he asked questions about the price EQT paid for BPEA, which some would say is high.

“It’s ultimately about the earnings power and the growth of the platform,” Sinding said. “EQT is the most highly valued private equity firm in the world, and the reason for that is the same reason we’re paying a good multiple for BPEA. We are solely focused on high value-added strategies, what we call active ownership. EQT’s average management fee is 1.4 percent. BPEA is at 1.75 percent. If you were to apply that same measure to someone like Apollo, you might be at 25 basis points or something. It’s a very different business than the huge platforms that you have in the US, with a lot of secondary products and credit products, which we don’t have, which are much lower margin. We’re in a high margin business. Ultimately, it’s like valuing any other company. It’s about the earnings generating capacity of the business, and we think that’s superb.”

Read the whole interview here.

Integrative medicine. Aaron broke some news this morning with his story on HGGC’s portfolio company Fullscript’s acquisition of Emerson Ecologics. It’s the second add-on to the firm’s technology platform for integrative health, and it follows a $240 million investment by HGGC and Snapdragon Capital Partners in November 2021. Liberty Lane Partners, the prior owner of Emerson, is retaining a meaningful stake in the combined company.

The addition of Emerson nearly doubles the annual revenue of Fullscript and doubles the number of integrative medicine practitioners and patients Fullscript supports to more than 70,000 healthcare professionals and over 5 million patients.

Integrative medicine integrates the best evidence-based practices across medical fields and shifts the conversation from “prescription” to “prevention,” and places practitioners and their patients in a two-way partnership, Aaron writes. This allows for a holistic approach to healing, including beliefs, overall wellness and community to treat the body and mind.
“Covid accelerated the consumers’ focus on their health across the board and it has also increased the focus on things such as integrative health, like natural health solutions, preventive type of healthcare,” HGGC partner Bill Conrad said. “You see more and more acceptance of that, specifically vitamins, minerals and supplements from the patient perspective but also from healthcare practitioners across the board.”

Check out the full story.

Women’s History Month. In the Wire throughout March, we’re highlighting the dealmakers PE Hub and Buyouts named Women in private equity: The class of 2022.
Today, we’re focusing on Ruulke Bagijn, head of investment solutions, Carlyle Group, profiled by Kirk.

The $65 billion investment solutions platform run by Bagijn combines primary fund investments, secondaries investments and co-investments. Backed by more than 425 LPs, it includes AlpInvest, a top player in the global secondaries market.

Bagijn, who was born in the Netherlands, was introduced to Carlyle in 2011 as the representative of Dutch pension PGGM in the sale of AlpInvest. Six years later, she joined the firm as head and managing director of AlpInvest’s primaries business. She was promoted in 2019.

Bagijn was with PGGM over 2009-16, most recently as CIO of private markets. Between PGGM and Carlyle, she was global head of real assets private equity at AXA. The experience, she says, put her “on both the LP side and the GP side,” something that has proved of value in her current role.

For more, read the whole report, in which we profile 10 stellar dealmakers.

That’s all for now. I’ll close with an Irish blessing:

May your pockets be heavy and your heart be light. May good luck pursue you each morning and night!

Erin go bragh,
MK