Firms form healthcare investing trade association

Forty healthcare-focused private equity firms including TPG, Apax and Kohlberg Kravis Roberts have formed the Healthcare Private Equity Association “to support the reputation, knowledge and relationships of the healthcare private equity community”.

Most of HCPEA’s members are based in the US. Its members’ 500-some healthcare portfolio companies have more than $200 billion of combined revenue and more than 750,000 employees, HCPEA said in a statement.

To join the association, members are required to have a minimum of three healthcare-related portfolio companies and be focused on investing in healthcare leveraged buyouts or late-stage growth equity. dues for the association are $5,000 per year.

The association will promote traditional networking and professional development initiatives – HCPEA is sponsoring three industry events this year. The association will also work with the government, the media and other organisations in the US to “foster a greater understanding of how healthcare equity investment contributes to the US economy”.

HCPEA will also underwrite research important to the healthcare investment industry.

The officers of the association all come from member firms. Brian Miller of Linden Capital Partners is president, Andrew Carragher of DW Healthcare Partners is secretary, and David Schuppan of Cressey & Company is treasurer.

Other member firms include Apax Partners, MetalMark, Kohlberg Kravis Roberts, Riverside Company, TPG Capital, Bain Capital, and Welsh, Carson, Anderson & Stowe.

Linden came up with the idea for the association around November 2009. He said the timing seemed right because the healthcare sector is undergoing the most significant change since the introduction of Medicare and Medicaid, and healthcare investors could use support navigating the changes. But even before the recent legislation, healthcare was still unique in its size and complexity, he said.

“Healthcare is the largest part of the US economy at about 17 percent of GDP, so it seems logical that the first sector-focused trade association in private equity be for healthcare professionals,” Linden said. “I also believe our sector is arguably the most complex one in private equity.”

The association fills a gap left by the other trade associations in the industry, Linden said. Venture firms have the National Venture Capital Association; the Private Equity Council is primarily concerned with lobbying efforts, and there are several regional associations. 

“I would expect that there will be other sector-focused private equity associations in the future,” he said. “We seem to have quite a bit of momentum out of the gate, so hopefully others will follow.”