Good morning Hubsters, Craig McGlashan here.
I’m the new editor of PE Hub’s coverage in Europe – which I’m sure you’ve noticed has been on the up over the last few months! I’d love to hear from you on how you see the European market developing this year – feel free to drop me or my team, Nina Lindholm and David Wansboro, an email any time.
So what’s been happening in Europe? A new report is out today from the trade association Invest Europe, showing healthy returns for private equity in the region. European buyouts IIR strengthened to almost 16 percent in 2021, beating MSCI Europe index return of around 6 percent. And European VC returns hit nearly 36 percent and nearly 25 percent over five- and ten-year horizons, eclipsing North America.
One deal that looks like it won’t happen is a potential blockbuster private equity bid for UK pharmacy chain Boots.
Figures as high as $10 billion were floating around for the bid earlier in the year. But owner Walgreens Boots Alliance has called off the planned sale, blaming the tumult in global financial markets for banks’ reluctance to underwrite the financing for reported bidders Apollo Global and TDR.
Never say never, though. Earlier this morning, Walgreens reported quarterly sales and earnings above expectations.
While that bumper deal looks some way off, there have been plenty of smaller European deals to keep us busy.
Much of what we’ve seen in the last few weeks has had an environmental element and that was very much in keeping with something I read this week – Preqin’s new ESG in Alternatives 2022 report. Among some of the interesting nuggets is that when it comes to impact funds, in Europe it’s very much about the ‘E’ – environmental – of ESG while in the US it’s more about the S for social.
We’re always interested in how the European market differs from the US, so here’s a little more from Preqin on that.
“To be able to create an impact fund, fund managers must report on the fund’s positive outcomes, which can incur considerable monitoring costs post-investment beyond standard financial reporting requirements,” writes Laura Messchendorp, in the report. “Anecdotally, it appears that in Europe the focus is largely on environmental factors. Meanwhile, in the US, widespread coverage of injustices such as the murder of George Floyd in 2020 means that social factors such as systemic bias and the underrepresentation of minorities in the workplace are often higher on the agenda.”
That environmental focus in Europe certainly tallies with what we’ve seen at PE Hub, as we’ve been expanding our coverage of Europe over the last couple of months. Rarely a day has gone by without at least one deal hitting our screens with an environmental slant.
Nina has fleshed some of that trend out for you today. She spoke with Marc Lindhorst, principal at One Equity Partners, about OEP’s purchase of DESMI, a Danish manufacturer of pumps, pumping systems and environmental cleaning equipment.
“Growing demand for flow control equipment as a result of increased environmental awareness is driving the sector,” Lindhorst told Nina.
Of course, our increased European focus does not mean we’ll be neglecting things Stateside and on that note, PE Hub’s Aaron Weitzman has an excellent interview with Eric Liu, partner and co-head of the global healthcare sector team at EQT.
Healthcare has been a huge theme for PE Hub’s US team, and this interview is the latest in that series. I found it particularly interesting that Liu says his firm takes a different approach to many of its peers – in what is a crowded market.
“The first is we have a very focused sub-sector approach within healthcare,” he told Aaron. “We do not invest in healthcare service providers like hospitals, nursing homes or physician practices, which are approximately 50 percent of the market, and which are the bread and butter of what other US healthcare private equity firms do.”
Read the article to find out which sub-sectors EQT are focusing on.
Also of interest for us European Hubsters is that Liu reckons his firm is “arguably the most active” investor in European healthcare.
Coincidentally, soon we’ll be the most active news source in European private equity!
Until next time,