Private-equity firm Veritas Capital is on the verge of finalizing a significant deal, planning to sell a stake in Cotiviti to KKR, an alternative-asset manager. This impending agreement would value the healthcare-technology company at approximately USD11 billion.
The potential deal, set to grant KKR a 50% stake in Cotiviti from Veritas, is expected to materialize in the coming weeks, provided the ongoing negotiations proceed smoothly.
Should the firms successfully reach an agreement, this transaction would rank among the notable U.S. private-equity deals announced in the past year. However, private-equity deal making has decelerated notably following the Federal Reserve’s decision to increase interest rates last year, causing takeover financing to be more expensive.
Veritas Capital’s impending sale of Cotiviti to KKR represents a significant milestone for the New York-based private-equity firm, which specializes in investments at the nexus of technology and government. Cotiviti, headquartered in South Jordan, Utah, operates as a technology and data-analytics company, focusing on cost reduction and regulatory compliance for healthcare payers and providers. Notably, the company serves over 180 healthcare payers, as indicated on its website.
This potential transaction marks an evolution for Veritas, who had previously explored options for partially or fully selling Cotiviti. Veritas had initially acquired Cotiviti in 2018 through its portfolio company Verscend Technologies for USD 4.16 billion in cash in a take-private deal.
Meanwhile, Veritas has been actively engaged in various business dealings, including the recent launch of fundraising for its ninth flagship vehicle, aiming to raise USD 13 billion. Additionally, the firm recently agreed to sell Guidehouse to Bain Capital for USD 5.3 billion.
In contrast, the private equity landscape in 2023 has been relatively slow concerning both investment and fundraising. Leveraged buyouts saw a decline of approximately 26% in deal value year-over-year as of Nov. 3, according to data from Dealogic. Similarly, fundraising experienced a dip of about 14% during the first nine months compared to the previous year, as indicated by PitchBook data.
The challenges faced by firms in raising capital for new funds stem from the limited number of exits, which in turn reduces the capital flowing back to investors. Notably, U.S. private-equity exits—sales of companies owned by firms—plummeted by 46% in the third quarter compared to the same period last year.
In contrast to the overall trend, KKR has had an active year in deal making. Recently, it concluded the acquisition of publisher Simon & Schuster from Paramount for USD 1.62 billion. Managing more than USD 500 billion across various strategies including private equity, private credit, real estate, and insurance, KKR is headquartered in New York.
Notably, KKR also announced plans to acquire the remaining 37% stake in insurance company Global Atlantic for USD 2.7 billion, thereby securing full ownership.
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