Exciting prospects for Yorkshire’s healthcare sector
THE region’s healthcare sector is set to benefit from a change in sector focus by private equity firms.
Research by business advisory firm Grant Thornton of around 100 private equity executives shows that healthcare and business support services will be the most popular choices among private equity firms.
The quaterly Private Equity Barometer found that more than 60% of private equity firms expect to change their sector focus in the next 12 months.
It showed that 55% of respondents expected to be most active in healthcare, pharmaceuticals and medical over the next 12 months – up from 47% in previous quarters.
Nearly 50% said they would be most active in business support, infrastructure and logistics compared to 41% in previous months.
Only 36% of respondents didn’t make any changes when asked to identify the three main sector groups in which they have been most active in the previous 12months and those in which they expected to be most active in the year ahead.
Ian Marwood, a partner at Grant Thornton in Yorkshire, said: “A growing number of private equity executives feel compelled to shift their focus to those sectors that are popular with the institutional investors that need to provide the cash for new acquisitions.
“That explains the popularity of sectors that offer steady cash flows, such as outsourcing, infrastructure and healthcare companies.”
He said that the survey reflected activity in the Yorkshire market. Grant Thornton manages Yorkshire Forward’s Access to Finance for Healthcare Technologies from its Leeds office.
More than £80m of funding is currently being sought by healthcare technology SMEs in the region to aid growth and development of new products and services.
The programme is supporting 40 companies to explore opportunities for funding through early stage investors, business angels and venture capitalists.
Phil Whaley of Grant Thornton, manager of the Access to Finance programme, added: “While the venture capital market has a reduced appetite for early stage risk, healthcare technology propositions are increasingly favoured over alternative sectors.
“If new technologies can be brought to market that deliver efficient and high quality patient care, then they have a place in the market. At present, investors are backing companies which are truly innovative, alongside those that carry the minimum amount of risk.”
Yorkshire has the highest concentration of medical device companies in the UK, with more than 200 firms employing 7,000 staff and producing an output in excess of £450m.
The region is an increasingly attractive prospect for investors and has seen six first round investments over the past two years, which accounts for nearly 10% of all first round investments in to healthcare technology companies in the UK.
