KKR Confirms No Plans to Launch Buyside Secondaries Business

KKR, the second-largest private equity firm in the world, has confirmed that it has no current plans to launch a buyside secondaries business. This decision was reiterated by Rob Lewin, the firm’s chief financial officer, during the first quarter earnings call on Wednesday.

Lewin stated that the strategy is “not a ‘need to have’ for us” and emphasized that KKR aims to be a “top-three player” in the space it operates in, which they do not believe they will achieve in the secondaries market.

While KKR has considered entering the secondaries space in the past, they have consistently maintained their stance of focusing on their existing business areas. This decision sets them apart from their private equity peers, many of whom have been increasingly entering the secondaries market.

Despite the growing trend in the industry, KKR’s cautious approach to the segment has solidified its position as one of the biggest names in private equity without a dedicated secondaries unit. The firm raised $31 billion in the first quarter and $88 billion in the last 12 months, demonstrating their continued success in their current business areas.

As KKR continues to prioritize their existing operations, the private equity world will be watching to see how their strategy evolves in the future.

Private Equity Firms Acquiring Behavioral Health Practices: A Growing Trend in Medicine

Private equity firms are making a significant impact on the behavioral health services sector, with a new study revealing that as much as a quarter of practices providing these services in some states are now owned by private equity investors. This trend, outlined in a study published in JAMA Psychiatry, highlights a growing interest among private equity firms in acquiring medical practices to maximize profits.

Lead author Dr. Jane Zhu from Oregon Health & Science University noted that private equity investors are increasingly targeting behavioral health practices due to improved insurance coverage and reimbursement rates, as well as a rise in demand for these services. The acquisition of multiple practices allows these firms to gain operational efficiencies and negotiate better reimbursement rates with commercial insurers.

While the expansion of private equity-owned practices may increase access to behavioral health treatment for some individuals, the study did not assess the impact on cost, quality, or access for patients. Previous research has shown mixed effects on quality following private equity acquisition of healthcare facilities, with price increases being a common outcome.

The study identified a significant number of mental health and addiction treatment clinics that had been acquired by private equity investors between 2012 and 2023, with some states seeing a high proportion of private equity-owned facilities. The researchers emphasized the need for policymakers to pay attention to the high rates of private equity ownership in the behavioral health sector.

As the behavioral health crisis continues to pose challenges in terms of workforce shortages and access gaps, the short investment timeframe and distinct business model of private equity investors raise concerns about how these factors may intersect with the national healthcare landscape. Further research is needed to understand the full implications of private equity ownership in the behavioral health sector.

Overall, the study sheds light on the increasing influence of private equity firms in the behavioral health services sector and underscores the need for continued monitoring and evaluation of their impact on patient care and access to services.

Private Equity’s Influence on Behavioral Health Sector: New Research Findings

New Study Reveals Private Equity’s Influence on Behavioral Health Sector

A recent study conducted by Oregon Health & Science University (OHSU), the University of Pennsylvania, and Yale University has shed light on the extent of private equity ownership in the behavioral health sector. Contrary to popular belief, the study found that private equity-owned mental health practices make up only 6.2% of all mental health facilities nationally, and 7.1% of all substance use disorder (SUD) facilities.

The researchers analyzed data from federal facility surveys and found significant variability in ownership among states. Colorado had the highest rate of private equity ownership in mental health facilities at 26.5%, while Virginia led in addiction treatment facilities at 22.1%. Despite these figures, private equity ownership in these segments of behavioral health remains relatively low in most states.

Private for-profit entities currently operate 42.5% of SUD facilities, 19% of mental health facilities, and 23% of combined SUD-MH facilities. Additionally, private equity has played a significant role in dealmaking within the behavioral health sector, with approximately 60% of all deals since 2018 involving private equity investors.

Private equity investors have expressed optimism about the opportunities for returns in addressing the service shortage and consolidating fragmented organizations within the behavioral health sector. With many American hospitals prioritizing other areas over behavioral health, private equity investment has become crucial in expanding access to services and optimizing existing organizations.

Lead author Dr. Jane Zhu emphasized the need for policymakers to pay attention to the high rates of private equity penetration in the behavioral health sector. The study did not delve into the impact of private equity ownership on costs, leaving room for further research and discussion on this topic.

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Viking Holdings Soars on Market Debut, Unlock the Editor’s Digest for Free

In a stunning market debut, cruise operator Viking Holdings saw its shares rise by 9% on Wednesday, closing at $26.10 after pricing at $24 in its initial public offering worth $1.54 billion. This success has not only cemented billions of dollars in profits for two of the world’s largest investors but has also bolstered private equity firms’ hopes of exiting other long-held investments.

The Bermuda-based Viking Holdings, known for catering to English speakers aged 55 and older and banning passengers younger than 18, now boasts a market capitalization of $11.2 billion. The strong demand from investors led Viking to increase the size of the deal twice before pricing, making it the second-largest IPO in the US this year.

This success story is a ray of hope for other private equity groups looking to offload long-held investments amidst concerns about the slow reopening of the IPO market after a two-year drought. With private equity firms estimated to be sitting on 28,000 unsold companies worth more than $3 trillion globally, the Viking Holdings IPO has set a positive precedent.

US private equity group TPG and Canada’s largest pension fund, CPP Investments, were the major shareholders who sold most of the shares in Viking’s float. The deal has resulted in gains exceeding $1.5 billion for each group, marking a significant return on their initial investments made in 2016.

Viking Holdings’ founder, Torstein Hagen, attributes the company’s resilience during the pandemic to their contrarian approach and strategic investments in expanding their fleet. With cruises already 35% sold for 2025, Viking Holdings is well-positioned for future growth and success.

The cruise industry, one of the fastest-growing tourism sectors, is expected to see 36 million passengers this year, up 20% from 2019. Viking Holdings’ successful IPO adds to the total value of US IPOs this year, which now stands at about $13.5 billion.

As the market for public listings remains delicate, the success of Viking Holdings’ IPO serves as a positive indicator for future offerings. With Spanish beauty group Puig set to list in Madrid in a deal worth up to €3 billion, the momentum in the IPO market is expected to continue. Unlock the Editor’s Digest for free to stay updated on the latest market trends and investment opportunities.