Our new report considers how shifting US regulation offers both headwinds and tailwinds for healthcare investors.

The research explores the regulatory landscape and its influence on the competitive positioning of healthcare companies, discussing how:

1) Regulatory forces can act as strong headwinds, particularly for businesses involved in the provision of medical care services or insurance. In our view these sub-sectors are less attractive than other areas of healthcare

2) Some of these same regulatory forces can act as tailwinds for healthcare companies, especially for growth focused technology businesses where long-term success is more dependent on widespread adoption than on payer rates.

3) In these select cases long-term regulatory shifts can create asymmetry to the upside for companies’ return profile.

‘Examining Healthcare’ argues for a nuanced approach to effective capital allocation in the healthcare sector, including a dual focus on limiting disruption from risks that are difficult to quantify and finding opportunities where regulatory shifts can accelerate the adoption of proprietary science or technology.

Read the full report

Hayfin’s third office in the United States will support new capital raising and investment opportunities in the region

Hayfin today announces that it has opened an office in Chicago. Along with its New York and San Diego offices, Hayfin now has three offices in the United States, underscoring its commitment to the North American market.

This office will provide Hayfin with an additional point of access to the North American market that will enable it to identify new fundraising and investment opportunities. Managing Directors Steve Bringardner, who sits in the Partners Solutions team, and Andrew Merrill in the Healthcare investment team will be based in Chicago to lead the efforts in developing the office and growing the team.

Tim Flynn, Co-Founder and Chief Executive Officer at Hayfin, said, “Expanding our presence in North America is a top priority for us. Located in the financial center of the Midwest, our Chicago office will help our team to unlock new opportunities and build relationships across North America while further enhancing our (historically) best-in-class service to clients.”

“Hayfin has a long-standing track record of serving the Chicago area since inception dating back to 2009, and the local office will enhance the existing relationships with client and investment partners.”

The opening of the Chicago office increases Hayfin’s total number of locations to 14 alongside the firm’s headquarters in London and offices in Dubai, Frankfurt, Madrid, Milan, Munich, New York, Paris, Luxembourg, San Diego, Singapore, Stockholm and Tokyo.

Hayfin is pleased to announce that, through its Direct Lending strategy, it has provided fully underwritten debt financing to support the acquisition of V.Group by a consortium led by STAR Capital. Hayfin’s support for the acquisition extends its long-standing relationship with V.Group and its management team, having been a lender to the business since 2020.

V.Group is a global provider of mission-critical services to the maritime industry, such as technical ship and crew management, crew welfare services (e.g. catering, travel, and digital wallets & payment cards), leveraged procurement, technical services, specialist insurance broking, and modern shipping-specific digital solutions.

Headquartered in London, it has a global presence with 50 offices across 30 countries and employs c. 2,900 employees worldwide. In addition, the group has access to the world’s largest international network of over 44,000 seafarers to provide its clients with professional crews. It currently services approximately 3,500 vessels from pedigree shipowners and managers alike, with safety and compliance at the heart of V.Group’s operating model.

Andreas Povlsen, Head of Maritime at Hayfin, comments: “This latest investment builds on Hayfin’s track record in the shipping sector and is the direct result of strong collaboration between our specialist maritime team and the broader Private Credit platform focused on originating corporate lending opportunities. We are delighted to continue our journey with V.Group alongside its impressive management team and its new partners in the consortium led by STAR Capital.”

Disclosure  

Past performance is not a guarantee of future performance. No investment, strategy or tested process can guarantee results. Please note, fees reduce returns to investors.  

That it has been a comparatively tough few years for private equity is news to nobody. The rate-hiking cycle of 2022-23 has dampened M&A activity, impacted PE managers’ return expectations and prompted LPs to review their allocations to the asset class.  

These developments have raised interesting questions for private credit. On the one hand, the same higher-interest-rate environment had prompted talk of a ‘golden age’ of private credit. On the other, the alternative lending market is widely perceived to be dependent, in large part, on strong PE-led M&A activity for its own deployment, as well as the return, of capital.  

Last week, Hayfin attended IPEM, one of the leading European conferences on private markets, in Paris. The official theme of ‘Forging Confidence’ reflected the sense of cautious optimism towards tentative signs of an early-stage recovery in deal volumes. The event provided us and our peers with a chance to reflect on the unusual environment of the past few years and what this means for private credit going forward.  

Newcomers find European private credit a tough nut to crack  

There has been a notable change in the mood music between last summer’s flagship private market conferences and the conversations taking place last week with regard to competitive dynamics in private credit. 

Last year, many investors and managers were suggesting that the market was about to be shaken up by a flurry of new managers. Both alternative investment firms and traditional asset managers were expected to pile into the asset class. 

That sentiment has now been turned on its head. A number of the newer entrants to the asset class are reportedly either reevaluating their private credit strategies or scaling back their operations entirely.  Subdued M&A activity and, by extension, direct lending volumes have been felt more sensitively by alternative credit providers who do not have an established presence and are looking to break into the market. 

The concentration of activity among a relatively small number of participants has been a longstanding feature of the European private credit market. The top 25 private credit funds in Europe have accounted for up to three-quarters of the total capital raised since 2007. By contrast, in the US, the top 25 funds account for approximately half of total fundraising, there is a long tail of smaller funds that hold a large pool of capital and can better compete with their larger peers on deal sourcing.  

In the European market, in other words, capital and investment opportunities accrue to the top 25 largest private credit funds, with the Direct Lending market in which we operate having 10 or fewer direct competitors.    

Advantages of incumbency laid bare 

The lingering uncertainty about the global macroeconomic environment, as well as the mismatch in valuation expectations between the buy-side and sell-side, all of which served to suppress transaction activity over the last couple of years, has begun to abate. We are seeing greater convergence on valuations and growing confidence that, if sponsors bring the right assets to the market, they are less likely to falter during the sale process.  

However, it remains difficult to assess when M&A activity will reach the top of its cycle again. It’s quite likely that a higher-interest-rate environment will remain a drag on a fully fledged rebound.  

Private credit firms that are less heavily reliant on an opportunity set defined by the cyclical nature of M&A will therefore continue to enjoy an advantage in deploying capital over the years ahead.  

In truth, large parts of the market do depend on this cycle. Once again, the established players with incumbency advantage are best placed to access narrower PE-led processes when M&A activity is subdued, and sponsors revert their focus on bolt-ons for existing portfolio companies. For example, in recent years, our existing exposure to more than 80 borrowers across our Direct Lending portfolios has allowed us to continue sourcing significant volumes of deal flow in high-quality companies we know well. 

The ability to originate these preferred deals is particularly advantageous in an investment environment characterised by a growing bifurcation in credit quality. Lenders without a large and sophisticated deal origination network will risk being adversely selected and ending up with concentrated exposure to second-tier credits, such as businesses that are more exposed to cyclicality, with tighter margins or more likely to struggle in a recessionary environment due to being smaller. Those who have that capability and the incumbency advantage can access deals with lower leverage and better documentation protections than has been the norm in recent years, at pricing levels that make for highly attractive risk-adjusted returns. 

Return of the broadly syndicated loan market? 

Finally, the post-summer gathering at IPEM provided an opportunity to reflect on another widely predicted trend that has not materialised to the extent that many expected. 

The first half of 2024 witnessed the widely heralded return of the broadly syndicated loan market (BSL), offering many upper-mid-market borrowers another avenue for financing, often at tighter spreads and more flexible documentation. This drove speculation that private credit managers would need to cut margins to compete. 

Our view had always been that a portion of deals which were financed by private credit in 2022 and early 2023, when leveraged finance markets were effectively closed, would be refinanced back into the syndicated markets. However, we predicted that there would remain a still-large opportunity set of sponsors and businesses for whom the tightest possible pricing isn’t their sole concern. That could be mid-market businesses less likely to find a solution on syndicated markets, or large-cap sponsors investing in a challenging sector or pursuing a buy-and-build strategy which requires incremental capital.   

It has certainly become more important for private credit managers to demonstrate their ability to access attractive deal flow involving companies in sectors, size brackets or situations where the certainty, efficiency, flexibility and resilience offered by a direct lender outweigh the purely economic or documentary incentives to tap the BSL market. But we believe that the comparative deal volumes in the BSL and private credit markets are bearing out our assessment that there is a large and fast-growing white space not covered by syndicated markets, available at a risk-adjusted-return profile that meets LPs’ expectations. 

Hayfin is pleased to announce that it has provided the debt financing to support TowerBrook Capital Partners’ (“TowerBrook”) acquisition of a majority stake in IDAK Food Group (“IDAK”) from Invision and Nord Holding.

IDAK is a strongly networked group of specialised companies and manufacturers operating across the premium frozen food sector. In recent years, IDAK has delivered strong growth, both organically and inorganically through strategic acquisitions in Switzerland and further abroad.

The change of ownership will aim to grow IDAK’s capital base and provide the company with a platform to pursue further M&A opportunities across Europe. The well-established IDAK management team, led by CEO Christof Lehmann, will remain in place.

Robert da Costa, Director, Private Credit, commented: “Hayfin has a longstanding relationship with TowerBrook and we are pleased to provide the financing for this transaction. We have been impressed by IDAK’s management team who have delivered exceptional historical performance. We look forward to working with the IDAK team and supporting their continued growth trajectory alongside TowerBrook.”

Olaf Hartmann, Head of DACH and Portfolio Manager for Private Credit, added: “IDAK has become one of the most exciting European food businesses in recent years, and we are delighted to be partnering with them to support their next stage of growth. The transaction also demonstrates the benefits of our local footprint and the strength of our DACH franchise, an area where we see significant opportunities going forward.”

Disclosure
Past performance is not a guarantee of future performance. No investment, strategy or tested process can guarantee results. Please note, fees reduce returns to investors.

Hayfin today announced it has entered into an agreement with Arctos Partners (“Arctos”), a private investment firm, to support a management buyout of the business, acquiring British Columbia Investment Management Corporation’s (“BCI”) majority stake. Financial terms were not disclosed.

This new partnership delivers Hayfin’s long-term objectives of greater team ownership, alignment, and incentivization, as well as generating superior and consistent risk-adjusted returns for clients. Arctos, via its Keystone strategy, which provides strategic partnership to leading financial sponsors, through bespoke growth capital and liquidity solutions, has underwritten 100 percent of the funding and will facilitate the Hayfin team becoming the majority owners of the common equity. BCI will remain a strategic limited partner in certain Hayfin funds.

Founded in 2009, Hayfin specializes in providing European and North American credit and private equity investment solutions to a global investor base. BCI acquired a majority stake in the firm in January 2017, and since that time Hayfin has experienced strong sustained growth and momentum, quadrupling its AUM, adding senior talent, and diversifying and expanding its strategies. Hayfin’s product offering now spans direct lending, special opportunities, tactical solutions, high-yield/syndicated loans, healthcare opportunities, maritime yield and private equity solutions.

Tim Flynn, Co-Founder and Chief Executive Officer at Hayfin, said: “This is an exciting new chapter that will support Hayfin’s ongoing growth while preserving our core identity and operational autonomy. Arctos has a best-in-class, like-minded team that recognizes the enormous opportunity available to investors in the credit markets today, and their experience only enhances our ability to serve our investors, borrowers and sponsors. Our long-standing team is grateful to BCI for the last seven years of successful collaboration, and we look forward to a continued relationship with them as an investor in our products.”

Ian Charles, Co-Founder and Managing Partner at Arctos, said: “Hayfin has an excellent leadership team supported by a robust bench of talent, proven track record and disciplined investment style. Their strategic growth ambitions make them an ideal partner for Arctos Keystone and provides our investors access to Europe’s leading private credit platform as that market continues to see rapid growth. We look forward to supporting Hayfin’s long-tenured investment team in delivering our shared objective of generating attractive risk-adjusted returns for our respective investors.”

Jim Pittman, Executive Vice President & Global Head of Private Equity at BCI, said: “We are delighted to have reached this agreement with Hayfin and Arctos, delivering an excellent outcome for BCI’s pension plan and insurance clients. We’re extremely proud of the partnership we forged with the Hayfin team over the past seven years, which has delivered significant growth in a critical period for the private credit market. We remain confident in Hayfin’s investment strategies and are pleased to remain as a limited partner in certain funds.”

Hayfin is pleased to announce that it is the lead lender providing the debt financing to support the acquisition of international events company, Easyfairs, by Cobepa, Inflexion and the existing management team.

Easyfairs is one of the world’s top ten events companies, welcoming more than one million visitors annually and 23,000 exhibitors to its events. Easyfairs organises 110 event titles in 12 countries across 12 industry verticals. It also manages eight event venues in Belgium, the Netherlands and Sweden.

The transaction will enable Easyfairs to drive faster organic growth through new event launches and geo-cloning of existing events, extend its geographic and sector footprint, enhance its position as a sector frontrunner in big data and artificial intelligence technologies, and unlock further strategic M&A opportunities.

Sebastiaan Tito, Principal, Direct Lending at Hayfin, commented: “Our investment into the acquisition of Easyfairs demonstrates Hayfin’s extensive experience in the events sector as well as our ability to successfully position ourselves in attractive market segments and execute financing agreements of significant scale to provide speed and certainty to our partners. We are excited to partner with the shareholders in supporting Easyfairs, a business with great potential, supported by a strong pipeline of organic and inorganic growth opportunities.”

Disclosure
Past performance is not a guarantee of future performance. No investment, strategy or tested process can guarantee results. Please note, fees reduce returns to investors.

Hayfin today announces that, through its Private Equity Solutions strategy, it is acting as lead investor, together with Eurazeo, in the €220 million Continuation Fund raised by 21 Invest France to support the next phase of its ownership of ProductLife Group (“PLG”).

PLG is a global expert in regulatory affairs and compliance consulting for the healthcare industry. Serving more than 1,000 clients ranging from pharmaceutical companies, biotech and medtech companies, the group covers the entire lifecycle of pharmaceutical products, from development to post-marketing vigilance, across more than 150 countries. The company has expanded rapidly, driven by double-digit organic growth and 16 acquisitions in nine countries since 2020.

In addition to its management team, which is reinvesting significantly, PLG will be jointly controlled by Oakley Capital and 21 Invest France, which is reinvesting through its sixth fund vintage and the newly established Continuation Fund led by Hayfin and Eurazeo. Other investors are joining in syndication.

Gonzalo Erroz, Managing Director, Private Equity Solutions at Hayfin, commented: “We are delighted to partner with 21 Invest France to help support the continued growth of PLG at an exciting time for the business, as it seeks to expand its global presence and offering. The Continuation Fund will provide PLG with substantial resources to execute organic growth initiatives and pursue strategic acquisitions.”

Severin de Mortemart, Director, Private Equity Solutions at Hayfin, added: “This transaction further adds to our teams strong track record of identifying and supporting established sponsors in local markets on the continued growth trajectory of marquee assets in Hayfin’s core sectors of focus.”

A major theme within global finance over the past 15 years has been the migration of leveraged lending away from banks and towards private debt funds.

This theme was initially most relevant for mid-market companies but has grown increasingly important for upper-mid market and large-cap borrowers as well.

Read the full report

Hayfin today announces that it has arranged the debt financing of Eurazeo’s acquisition of Eres Group (“Eres”), a French employee savings distribution platform. Hayfin’s support for the acquisition extends its relationship with Eres, having been a lender to the business since IK Partners’ acquisition of Eres in 2019.

Established in 2005, Eres is the leading French independent player in the advisory and structuring, asset management and distribution of employee profit sharing plans (PEE, PERECO), retirement schemes (PER) and employee shareholding plans. Headquartered in Paris, Eres distributes its products through a network of more than 6,600 distributors (wealth management advisors, insurance brokers, accountants) and directly addresses mid-sized companies and large groups.

Clement Le Lagadec, Hayfin Director for Private Credit in France, commented: “Thanks to its strong knowledge of the company and its management, Hayfin has been able to quickly position itself as a lead lender in this highly competitive process. In this vein, we are delighted to support Eurazeo in the financing of this transaction. We have been impressed by Eres’ performance over the past five years and are excited to continue our journey with the company alongside its management and its new private equity partner Eurazeo.”

Disclaimer: Past performance is not a guarantee of future performance. No investment, strategy or tested process can guarantee results. Please note, fees reduce returns to investors.