Sovereign Wealth Funds Betted on Tax Inversions and Emerging Pharma

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Increasingly, sovereign wealth funds and long-term public pensions are investing more directly into healthcare investments. A number of institutional investor trends had emerged in 2015 such as tax inversion opportunities, emerging pharmaceutical companies and medical practices. For instance, asset heavy Canadian pensions are investing in medical practices across America in a number of fields, perceiving the U.S. as a profligate spender on healthcare services. For example, OMERS PE, the private equity arm of the Ontario Municipal Employees’ Retirement System, acquired Wisconsin-based Forefront Management Holdings, a physician management company focused on the dermatology sector in January 2016. The seller was Varsity Healthcare Partners, a healthcare-focused private equity investment firm. Other Canadian pensions keen on these buyouts are Caisse de dépôt et placement du Québec (CDPQ) and the Ontario Teachers’ Pension Plan (OTPP). According to data from the Sovereign Wealth Fund Transaction Database, sovereign wealth funds spent directly US$ 4.04 billion in the healthcare sector in 2014 and US$ 6.26 billion in 2015. Including all public investors in the database, the total in direct healthcare adds to US$ 7.73 billion in 2014 and US$ 10.68 billion in 2015.

Asian asset owners had moved in on pharmaceutical companies on the open market, while securing deals with biotech firms needing strategic, patient capital.

Asian SWFs Seek Emerging Pharmaceuticals

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