Happy Fri-yay, Hubsters! Aaron here with a surprisingly jam-packed summer Friday edition of the Wire.
OMERS Private Equity has agreed to acquire Pueblo Mechanical & Controls from Huron Capital Partners for an undisclosed amount. Pueblo provides HVAC and plumbing installation, retrofit and repair services to customers in education, municipal, and healthcare end markets.
OMERS will provide resources and expertise to further accelerate the company’s growth and support its strategic expansion through M&A.
“Dan [Bueschel, CEO of Pueblo] and the team have built Pueblo into an industry-leader, and we look forward to partnering with them. It is an exciting moment in the commercial services industry, and Pueblo is well-positioned to capitalize on the secular trends towards energy efficiency, sustainability, decarbonization, and digitization that are driving demand,” said Jeff Kahn, director, OMERS.
This goes hand and hand with a story my colleague Iris Dorbian wrote this week about how plumbing and HVAC services will prove recession resistant. PE buyers are snatching up these businesses.
Read the story by Iris here.
Strategic alliance. KKR is teaming up with Loop Capital, a Black-owned and led investment bank headquartered in Chicago. Loop will provide services to KKR’s equity capital markets (ECM) clients, which include private companies and private equity sponsors.
According to the press release, this move will bolster KKR’s capacity to serve as a full-service underwriter for initial public offerings for both KKR portfolio companies and non-KKR affiliated companies. The strategic alliance will also broaden KKR’s distribution base for ECM transactions by providing the firm with access to Loop Capital’s complementary base of institutional investors.
“This is an important milestone for our capital markets business and a testament to our continued commitment to expanding our ECM capabilities for the benefit of our clients,” said Adam Smith, co-head of credit and capital markets at KKR. “We are excited to deepen our relationship with Loop Capital and look forward to bringing the benefits of their market-leading franchise to our platform.”
Future of healthcare. You should not be surprised I am talking about this topic. A recent survey by Bain & Company shows that “new models” of healthcare will capture 30 percent of the US market over the next eight years as retailers, payer-owned providers and advanced primary care disruptors continue to take market share.
“As the industry continues to shift toward value-based reimbursement, there has been an increase of nontraditional players and models in primary care,” said Dr. Erin Ney, an expert associate partner at Bain & Company. “As we look ahead, rising costs, physician shortages, consumerism and digital disruption will continue putting pressure on traditional healthcare models, paving the way for additional growth of models that promote more efficient care, improved outcomes and reduced total cost.”
Physician shortage is not a new trend but at the same time, this survey details how it will not get any better – despite things being done to help with burnout and retention. According to the survey, the US is expected to be short 45,000 physicians by 2030. Also, today – more than 70 percent of physicians don’t work alongside other specialists, and more than 45 percent don’t work alongside advanced practice providers.
“That won’t be sustainable by 2030, when Bain expects leading primary care providers to function in multidisciplinary care teams with an integrated approach to medical, behavioral and social determinants of health,” said the survey.
This survey is pretty telling about where the sector is heading. To read more, click here.
The time is now. Sticking on the healthcare beat: there is no better time to invest in healthcare, according to Rick Elfman, managing director at Sterling Partners.
Elfman has been with Sterling since 1987 (the year I was born, yikes!) and has been a healthcare investor throughout the years. I spoke with him about the firms’ approach and how Aging baby boomers are driving rollups of physician practices in areas like dermatology, vision and physical therapy.
“As people get older, they need more healthcare; it’s just a fact of life,” said Elfman. “With the baby boomers starting to get older and needing more care, there is no better time to invest in the sector.”
Sterling has been consolidating physician specialist practices for years. The firm invested initially in Blue Sky Vision in 2017, Platinum Dermatology in 2016 and Results Physiotherapy in 2014.
Sayonara. Finally, PE pros can rest easy this weekend. It looks like the tax on carried interest won’t be raised after all. It seems Senator Kyrsten Sinema (D-AZ) has succeeded in removing the carried interest provision from the Inflation Reduction Act of 2022, which needs all 50 members of the Democrat caucus to pass. That’s one less thing to worry about – at least for now.
That is a wrap for me! I am going to be in Cape Cod for the first time ever this weekend. I had many great accomplishments as an athlete when I was younger but one thing that I never achieved was to be invited to play in the CC summer baseball league. The league playoffs start today, and I am going to watch the best college players in the country! Until next week…
Cheers,
Aaron
