Good morning, Hubsters. MK Flynn here with today’s Wire.
I hope you had a good weekend. In New York, the weather was warm, and I had a chance to watch the sea lions frolic in Brooklyn’s Prospect Park Zoo on Saturday. On Sunday, New Yorkers enjoyed the biggest marathon since the pandemic began.
Starting the work week, things are hopping. A big urgent care exit for Warburg Pincus was just announced; PE Hub spoke with GTCR about two recent platform companies; and Buyouts discussed growth equity in today’s challenging economic market with Sageview.
Urgent care. VillageMD just announced it has agreed to acquire Summit Health-CityMD, a provider of primary, specialty and urgent care. The transaction is valued at approximately $8.9 billion with investments from Walgreens Boots Alliance, and an affiliate of Evernorth, a subsidiary of Cigna.
The deal marks an exit for Warburg Pincus.
“We are proud of our role in the creation of a world-class company that is driving innovation in healthcare and delivering superior health outcomes to its communities,” said TJ Carella, head of healthcare at Warburg Pincus. “Our partnership with CityMD started over five years ago, continuing through the formation of Summit Health. VillageMD is a perfect partner for the business, and we look forward to the combined company’s next phase of growth.”
The Leaders Strategy. GTCR is famous for teaming up with seasoned executives in a specialized industry and building a platform company that develops and acquires entities in the subsector. The Chicago firm calls the approach The Leaders Strategy. Last month, GTCR announced two new platforms that leverage the approach, Harpula Health Holdings and Blucrest.
Today, PE Hub is featuring Aaron Weitzman’s conversation with GTCR managing director Ben Daverman and principal Geoffrey Tresley to about Harpula.
“We’re focused on building a platform around improving the efficiency of drug research and development, specifically, technologies that lower the cost, and increase the speed of clinical trial delivery,” explained Tresley. “To do that, we’re looking at founder and sponsor backed companies, as well as carve-out opportunities across the e-clinical value chain.”
He added that the goal is to build a “more holistic solution that addresses critical pain points around site selection and feasibility, patient recruitment and retention, and the collection and analysis of clinical trial and safety data.”
“The clinical landscape remains highly fragmented,” he said. “There’s an opportunity to build through acquisition and organic growth, a much more coordinated technology solution. M&A and organic growth are going to be a key part of the strategy here.”
To form Harpula, GTCR is partnering with Steve Powell, former CEO of Synteract, a biotechnology-focused contract research organization, and Mary Mattes, former EVP of Syneract.
“We are actively pursuing a few opportunities,” Tresley said. “Currently, Steve and Mary have a great network and deep domain expertise, which is proving highly additive as we develop higher priority targets.”
For more, read the full story here.
And Check out Aaron’s earlier story on Blucrest.
With Blucrest, GTCR is reuniting with David Inns, Lynn Herrick and Bill Yates, whom the firm backed in 2017 with the acquisition of GreatCall, a provider of connected health and personal emergency-response services for senior citizens across the US. In their roles as CEO, COO and CMO of GreatCall, the team took the company from pre-revenue in 2006 to an acquisition by Best Buy for $800 million in 2018.
Strong get stronger. Growth equity has been wildly successful in recent years, but the strategy is now facing a major test, writes Buyouts’ Kirk Falconer.
Kirk spoke with Scott Stuart, co-founder of Sageview Capital, to talk about the market correction’s impact on growth equity, how Sageview is preparing itself and portfolio companies for a downdraft, and the opportunities the firm sees today and over time.
Last year, Sageview closed a third fund at $710 million, giving it dry powder to help weather a slump and invest in emerging dealflow.
“During the frothy market of the last few years, we were very careful because we knew this day was coming,” Stuart said. “Having seen this movie before, we also anticipate that there’ll be really good opportunities. We’re not there yet, but if we hit a recession, if the markets go even lower, if we have big problems with companies and countries, that’s when you can find some compelling investment opportunities. We think this next vintage of funds may be very good. That’s been the historical pattern.”
Stuart continued: “I would say that in downturns in general, the strong tend to get stronger and can gobble up smaller, weakened competitors. In growth equity that could be particularly acute because some of the smaller, not-great technology companies are burning capital and they can’t find new capital, so they are sort of pushed into the arms of the consolidators. That’s a volume knob we’re turning up. We have companies in supply-chain technology – that’s a classic industry where the end-customers are going to be feeling pain. Some of the smaller competitors may not be growing as rapidly as they hoped, they may not be able to get capital, and to the extent that our really good company could be a platform, that’s something I want our firm to pursue with more energy.”
Read Kirk’s full interview here.
That’s it for now. I’ll be back with more tomorrow.
All the best,