Private equity is secretive, short-termist and in it for big profits (bigger the better). Given that many healthcare service companies depend almost entirely on the public sector as the payor, this doesn’t make private equity an ideal investor, does it?

I mean, if you were the state, would you want to partner with a private equity-backed company?
Well, no, I’d say you probably wouldn’t. And, interestingly, we have examples of other types of investors in Finland and Spain who appear to have pretty impressive performances.

In Spain, we have Ribera Salud, the healthcare management services company owned by two mutuals which is a partner (normally a minority partner) in half a dozen administrative concessions. Perhaps because it is owned by mutuals, and, certainly because it is prepared to take minority stakes, it has grown fast. Sales, now running at around €130m a year, should ramp up to €500m in three years when Ribera hopes to do an IPO.

In Finland, we have Korona, a private equity investor, where churches and charitable foundations account for nearly half the €53m in its fund. It has taken stakes in no fewer than nine healthcare service companies.

Chief executive Vesa Lehtomäki ticks of the normal private equity rules which he is happy to break. “We are happy to take a minority stake, we are happy to stick around for longer than 3-5 years if necessary and our chief investment criteria is best practice, rather than profit potential.”

Korona’s investments include a minority stake in Coxa, a pioneering hospital which specialises solely in orthopaedic surgery, where it sits alongside public sector investors who valued private sector savvy. We interview Lehtomäki in our next issue. But the fund, started in 2006 appears to be doing extremely well and has already sold off four investments.

Now a third investor, with similar characteristics, has bought Aleris in Sweden. Investor AB’s dominant shareholder is the not-for-profit Wallenberg foundation whose profits all go to finance R&D in Sweden. It holds companies for 10-15 years, 50 years and in one case for over 100. To say that Investor AB has strong links to the Swedish governing elite is to understate the case. It is part of the Swedish elite.

We think that companies like this are likely to win, long-term, over private equity funds because they are perceived as potential strategic long-term partners by governments. And, right now, that is what governments are looking for in healthcare services.