NPS, KTCU pour $100 mn into healthcare co-investments

The National Pension Service (NPS) has put around 100 billion won ($93 million) into an equity stake in Dental Corporation, Canada’s largest network of dental clinics, in a co-investment with L Catterton, a consumer-focused private equity firm, according to sources with knowledge of the matter on June 7.

Separately, the Korean Teachers’ Credit Union (KTCU) has invested about $7 million in St. George's University, a Caribbean medical school in Grenada, in a co-investment with the Carlyle Group.

No further financial details were immediately available.

Their recent co-investments underscored the strong interest of private equity investors in the healthcare sector.

In the ASK 2018 Global Private Equity & Debt Summit on May 29, Korea Investment Corporation and Teachers’ Pension picked healthcare as one of a few sectors they are chasing for private equity investment.

With a rapid increase in aging populations, the prospects of more interest rate hikes and an economic slowdown raised the attractiveness of healthcare-related companies because they are seen less cyclical.

For NPS, its co-investment in Dental Corporation followed the $100 million commitment in 2016 to a $2.5 billion blind-pool fund of L Catterton. It became the first South Korean investor in L Catterton with the capital commitment.

In hunt for deals in the increasingly crowded co-investment space, NPS is seeking to build strategic relationships with general partners, Hyung Don Choe, head of global private equity at NPS, said in the ASK 2018 Global Summit.

He added that the $580 billion pension scheme requires co-investing for large buyouts, for example, when writing $100 million equity checks.

In early 2017, NPS acquired a 10% stake in TeamHealth Holdings Inc. for $300 million in a co-investment with Blackstone Group which bought the full ownership of the US hospital staffing company in a $6.1 billion transaction.

By co-investing, limited partners can save fees paid to the fund manager and make capital gains from a buyout deal in the proportion of their equity stake in the invested company.

In April, Dental Corporation said that it secured a significant strategic investment by L Catterton, without disclosing financial details. It provides all management services to over 250 dental clinics across Canada.

L Catterton was launched in 2016 through the partnership of private equity firm Catterton, luxury goods maker LVMH and Groupe Arnault, a French investment company.

By Chang Jae Yoo

yoocool@hankyung.com