Micro-to-small capitalization operating companies in high-growth markets represent a tremendous investment opportunity. There are myriad such deals available, and due to their small size, they often fall under the radar of most private equity funds. In addition, these companies are often managed by their owner/founder, who frequently lacks the experience and resources to grow the business beyond a particular threshold. With a focused growth strategy, including the introduction of new business lines or markets (especially emerging markets), and the implementation of rigorous business processes these companies have great potential to prosper. Their free cash flow can be used either for re-investment or for dividend payments in the short-run. In the long-run, the growth prospects of the companies will support a trade sale or public offering of shares that will allow investors the opportunity to realize significant returns.
Healthcare is one high growth sector targeted by Kubera. Favorable patient demographics and a willingness of payers (and increasingly patients) to spend for cost-effective new therapies, technologies, and delivery mechanisms generate attractive opportunities in all economic cycles. Small companies, in particular, offer the growth opportunities and operational efficiencies that can create companies that are superior return investments.
Healthcare-related technologies another particular focus for Kubera. With massive investment in research and development from governments, and market drivers including globally aging demographics, breakthrough building-block technologies (e.g., novel sensors), this market is expected to provide ample opportunity for new approaches to address issues through technology that are currently tied to human resources. Mobile health, biometric and health-related sensors, and changing approaches to reimbursement models for health care provisioning make this a key area for Kubera.