While healthcare M&A has been a major feature of global equity markets in recent years, one area noticeably overlooked by investors is the UK specialist care market. Montreux Capital Management managing partner Oliver Harris believes this is changing – with global investors now recognising the sector’s strong fundamentals.
Oliver Harris, Montreux
“Despite its size and potential, the UK specialist care sector is highly fragmented. The top 10 providers control more than 15% of the market and in excess of 81% of assets lie outside the top 16,” Harris says. This presents a huge opportunity for larger participants to purchase smaller care groups at low P/E multiples, lean out process and bolt on existing platforms and resources. Such actions will fashion earnings growth through cost savings and increase the scope for revenue creation.
“Smaller assets are currently being bought at 6x earnings by larger assets trading at 10x, some as much as 13x earnings. It is easy to see how this is lucrative for investors.”