September 7, 2015
Interviewed by: Tom Franco
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Why Allianz Likes Healthcare

Multiples in the healthcare sector are high for private equity, but investors say the potential for growth far outweighs today’s prices. Allianz Capital Partners’ head of Americas Susanne Forsingdal says structural changes in healthcare are making investments very attractive in the long term.

Multiples in the healthcare sector are high for private equity, but investors say the potential for growth far outweighs today’s prices. Allianz Capital Partners’ head of Americas Susanne Forsingdal says structural changes in healthcare are making investments very attractive in the long term.

Why Allianz Likes Healthcare
With Susanne Forsingdal of Allianz Capital Partners

Dan Feder, Washington University Investment Management Company: Hello. We’re here with Susanne Forsingdal of Allianz today.     

Tom Franco, Clayton, Dubilier & Rice: Susanne, spice managers and the healthcare space—do you have that kind of exposure?

Susanne Forsingdal, Allianz Capital Partners: We do.

Franco: What is it you like about healthcare?

Forsingdal: Well, if you look at returns over the past five or six years, you’d notice healthcare and software in particular have really been outperformers, but I think there are good reasons for that. Both sectors are…really growing in size and importance, long-term. Moving from being in software, moving from being a small part of every business to being a huge part of every business. Healthcare, of course, there’s some structural changes taking place in the U.S. in particular right now.

But, in general, even in emerging markets and in Europe, change is taking place that will make the healthcare sector more and more democratic. The demographic changes will make healthcare more interesting for the future.

Franco: Interesting. I would think Europe has more regulatory baggage associated with it. Is that true?

Forsingdal: Some countries do. Some countries, not so much. Some countries, coming from the Nordic countries—very well-established, long-term systems that cover everybody. [There’s] nothing new there for other regions. That…still needs to be developed in some regions like the Nordics. There is a lot of focus on cost because, if it is available to everybody, they want to make sure everybody gets the service they need but at the lowest cost possible. So, [there are] different dynamics in that compared to what we see in the U.S., where I think we’re actually quite a bit behind in that regard. That would be a way for the future, where today we’re extremely inefficient when it comes to healthcare and making sure that patients are only getting the service they need at the cost that is reasonable.

So, [there are] a lot of efficiency gains to be made in the future.

Franco: Are you worried about the multiples associated with some of these healthcare investments?

Forsingdal: I think there should be plenty of opportunity for growth, so I am not so concerned about the multiples right now.

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