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Vistria puts its money where its mouth is; GTCR discusses The Leaders Strategy

Happy Fri-yay, Hubsters! Aaron here on the Wire to end the week.

This comment about dealmaking jumped out at me this week:

“We are seeing a definite slowdown now, and I think the peak is behind us,” said Marco De Benedetti, co-head of Carlyle’s European private equity unit was being interviewed on Bloomberg TV. The interview took place at the SuperReturn conference which was held in Berlin.

We would love to hear your thoughts on this, dealmakers. Do you agree? What are you seeing out there? Hit me up at aaron.w@peimedia.com.

Feel good Friday. A lot happened this week so in case you missed it: earlier in the week, the US Surgeon General gave an advisory, calling on companies, communities & individuals to take action towards the youth mental health crisis in the nation.

In response to that, The Vistria Group announced their commitment of $250 million towards aiding the crisis, joined by their portfolio companies Edmentum and MSI who made commitments as well.

I had a chance to catch up with Amy Christensen, partner & co-head of healthcare at Vistria Group and a member of Buyouts’ and PE Hub’s class of 2022 Women in PE, and I asked her about this announcement.

“We see this as an example of private capital at its best,” she said. “We can act quickly to address societal challenges by investing in high-quality, evidence-based treatment, focused on helping children and young people nationwide. We are especially focused on treatment models that address kids’ unique needs along the continuum of care.”

I, for one, am not surprised, given that the firm’s mission statement is to achieve profit and purpose. You can read more about Vistria’s healthcare investment strategy here.

Speaking of healthcare… This morning, I dropped the latest profile in my series showcasing PE firms investing in the sector.

I had the opportunity to talk with Sean Cunningham and Ben Daverman, managing directors and co-heads of healthcare at GTCR, to talk about the firm’s approach and where the firm sees opportunities in the sector.

GTCR pioneered The Leaders Strategy, which involves partnering with management leaders in core domains to identify, acquire and build market-leading companies through transformational acquisitions and organic growth.

The approach “always starts with an exceptional management team, whether that’s an incumbent team that we’re backing, or a management team that we’re bringing into an investment,” Cunningham explained.

When seeking management, GTCR looks for folks who have “been-there, done-that,” Cunningham said. “By that, I mean executives and teams that have a demonstrable track record of success, particularly in businesses that have been growing both organically and with M&A. We like to back executives in the industries and areas of healthcare where they’ve been most successful in their history. We like the teams that have a track record of equity value creation. And if we can find ways to get capital behind them, that’s always for us the first step.”

Read the whole story here.

I am always looking to highlight PE firms investing in the healthcare space, so if you want to be a part of the series, feel free to pitch me.

First-time fundraiser. Buyouts’ Chris Witkowsky wrote a piece about Patient Square. The first-time firm led by ex-KKR healthcare specialist Jim Momtazee, is racing toward what could be the largest-ever first-time private equity fund, two sources told Buyouts.

“The firm is among a handful of first-time fundraisers in a market that has increasingly turned against them, as LPs run out of allocation space for the year,” Chris writes. “Some firms, however, led by partners already well-known among LPs, with provable track records, are having an easier time bringing in LP capital.”

Chris detailed how Momtazee assembled a strong team of healthcare specialists, including Alex Albert, who was formerly co-head of PE healthcare investments at Ares Management; Neel Varshney, who joined from KKR, where he was a managing director on the firm’s Americas healthcare team; and Karr Narula, who formerly worked at KKR as head of the portfolio operations team in the Americas.

Read the whole story here.

In case you missed it: PE firms are racing to consolidate the car wash sector. PE Hub’s Obey Martin Manayiti details how investors have discovered the appealing attributes of the car wash business, including the basic service, strong margins, low working capital, labor efficiency and recurring revenue base.

Obey wrote that the US car wash service market size was valued at $14.21 billion in 2020 and is expected to expand at a compound annual growth rate of 4.8 percent from 2021 to 2028, according to market research firm Grand View Research.

“Over the last few years, the professional investor class has discovered the appealing attributes of the car wash business: the basic service, strong margins, low working capital, labor efficient, recurring revenue base, and that the industry is highly fragmented and ripe for consolidation,” said Gary Dennis, founding partner and vice chairman of Mammoth Holdings.

Read the whole story here.

Operational Excellence. Calling all operators. Do you know a best-in-class operator? It’s not too late to nominate them for Private Equity International’s Operational Excellence Awards 2022. The deadline has been extended to Friday, 24 June.

Find details and the entry form here.

Well, that is going to do it for me. I am looking forward to another weekend. I will be doing some dog sitting, going to a wedding in Brooklyn and will be the king of the court when I hoop again on Sunday. Wishing everyone a happy and safe weekend. Until next Friday…

Cheers,
Aaron