Press Room
Majority of private equity firms change sector focus
64% private equity firms expect to change their sector focus
somewhat in the coming 12 months, according to Grant
Thornton's Private Equity Barometer. The quarterly survey of more
than 100 private equity executives suggests that healthcare and
business support services will continue to be the most popular
choices among private equity firms .
"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," commented Mo Merali, Head of Private Equity
at Grant Thornton.
Only 36% of respondents did not make any changes when asked to
identify the three main sector groups in which they have been most
active in the previous twelve months and those in which they
expected to be most active in the year ahead.
55% expected to be most active in the group comprising
healthcare, pharmaceuticals and medical in the next twelve months,
up from 47% which had been most active here in previous quarters.
48% expected to be most active in the sector group comprising
business support, infrastructure and logistics, compared to 41%
that had focussed on it in previous months.
Meanwhile, the results suggest that the sector group including
industrials, manufacturing and engineering will replace consumer
retail and food as the third most active sector for private equity
investments in the coming months, with votes of 38% and 34%
respectively.
Healthcare and high technology remain most expensive targets as
prices fall slightly
Private equity respondents suggest that prices will get lower in
most sectors in the coming months. At the top, average price
earnings (PE) ratios are expected to amount to 7.3 for healthcare
and 6.9 for high technology, where previous PE ratios were slightly
higher at 7.6 and 7.0 respectively. Real estate investments are
expected to have the smallest price tag with a PE ratio down to 4.7
from 5.3 in previous months.