International Investments in Health and Wellness

International Investments in Health and Wellness

Capital market activity within the health and wellness market has expanded by 633% from 2020 Q1 to 2022 Q1. The health and wellness industry includes all activities that promote physical and mental wellbeing, from yoga to healthy eating, personal care and beauty, nutrition and weight loss, meditation, spa retreats, workplace wellness, and wellness tourism. The market has experienced rapid growth since the global COVID-19 pandemic in 2020, highlighting the importance of mental, spiritual, and physical well-being.

The pandemic also highlighted the significance of good living behaviors like improved nutrition, going to the gym, practicing yoga, and stress reduction. The healthy eating, nutrition, and weight reduction market is the second largest, accounting for almost 20% of total revenue. Furthermore, the health and wellness industry have the greatest worldwide expansion potential. Given these considerations, the health and wellness industry appear to be the most promising investment opportunity throughout the forecasted period.
In this report, J&A analyzes the international capital market activity conducted within the health and wellness market between 2011 and 2022.

Overview of the Health and Wellness Market

  • The medical technology sector experienced the greatest capital deployment within the health and wellness sector of over $13 billion in the period. This shows the importance of the industry and raises the demand for tailored industries in the health sector.
  • The applications software development sector received the second-largest capital deployment, with $9 billion.
  • Care services had a significant percentage of capital raised during this period, with $7 billion. This indicates the constant growth of the mental health sector in the forecasted time.

 

Health and Wellness Industry Market Trends

1 – Clean and Healthy Eating

Consumers are more concerned with living longer and better lives. Consumer preferences have evolved toward eating more natural, organic food that is free of additives and preservatives. Today, eating clean is directly related to a gluten-free, dairy-free, non-refined carbohydrate, and sugar-free diet. The global gluten-free retail sector is expected to increase at a 9% annual rate from 2017 to $12 billion by 2024.

2 – Increasing Demand for Wellness Tourism

Wellness vacations account for 17% of total tourism spending. Increasingly travelers are visiting the Asia-Pacific region, Latin America and the Caribbean, the Middle East, and Africa to get in shape and return home calm and collected. The wellness tourism market is worth $639 billion and growing at a 7% annual rate from 2015 to 2017. Wellness travel is expanding twice as fast as the total tourism growth rate of 3%.

3 – Personalized Technology of Health and Wellness

Smart watches, health and fitness trackers, heart rate monitors, apps that help users’ emotional and mental health, and virtual assistants have all seen an increase in popularity. Wearable technologies are expected to help people live 70% longer, maintain a 63% more healthy life, and pay 62% less in insurance premiums. By 2022, the wearables market is estimated to reach $27 billion.

Announced Health and Wellness Investments Since 2020

  • Between 2020 and 2022, 3,000 investors deployed capital into the health and wellness market. In that time frame, 4,000 deals were deployed by 4,206 investors in the health and wellness sector.
  • In 2020, a focus on health and wellness (due to the global COVID-19 pandemic) led to a spike in deal flow in the sector. The largest deal was calculated at $17 billion, with a total of $146 billion in capital invested.
  • Jahani and Associates (J&A) anticipate that trend will continue to grow with notable increases in 2022 and forward.

Announced Health and Wellness Capital Markets Deals

  • The USA is leading the capital raising with 72% of the total raise. Additionally, the USA has the largest market size in the health and wellness industry at $53 billion in value.
  • Brazil has the second-largest capital raise share, with 8% and Sweden holds the third-largest capital raise share, with 3%. In general, Southeast Asia, the Middle East, Europe, the Gulf Cooperation Council, and Australia are experiencing increasing volume in their capital markets.
  • 48% of capital raised within the sector was deployed into privately held entities, which shows the growth potential of the market and the emergence of new competitors in the sector.
  • An additional 13% of deals done within the health and wellness industry were PIPE, private placements into publicly enterprises, and transactions.
  • In the health and wellness sector, 33% of capital deployed was put into mergers and acquisitions. This indicates that there are large firms that are interested in market consolidation.
  • Less than 1% of capital deployed in the sector was done through IPOs, which shows a lack of maturity within the sector.

Investor Spotlight: Shore Capital Partners

The Company

Shore Capital Partners is a private equity firm based in Chicago, Illinois, founded in 2009. The firm prefers to invest in growth-stage companies through buyouts and seeks to invest in business products, business services, consumer products, consumer services, materials, resources, healthcare, life sciences, oncology, manufacturing, and technology-based sectors in North America.

Website: www.shorecp.com

The health and wellness industry globally has moved its portfolio towards mindfulness and personal care health and well-being. Health and fitness companies in North America dominate capital markets and have raised significantly more capital than the Middle East, Southeast Asian, and European competitors. J&A predicts a continued increase in capital market activity within the sportswear sector as economies become more interconnected and companies expand into new international markets.

Sources: PitchBook, UL, Forbes, CbInsights, Medium, PolicyAdvice, McKinsey.


Sportswear Investments in the Middle East

Sportswear Investments in the Middle East

The Middle Eastern sportswear market was valued at $5 billion in 2020 and is expected to grow with a compound annual growth rate (CAGR) of more than 6% from 2021 to 2025. The sportswear market gained rapid growth during the global COVID-19 pandemic in 2020 as a result of an increased focus on health and wellness. Manufacturers and retailers have expanded their business in production and categories in sportswear as a result.

Sportswear or activewear is clothing, including footwear, worn for sport or physical exercise. Sports clothing is divided into 3 main sectors which are women’s wear, men’s wear, and children’s wear. Women’s sportswear is the top sector in terms of growth, and it is projected to continue to grow up to 7% by 2025. The sportswear market is projected to grow to over $17 billion by 2028. In this article, J&A will analyze the capital market activity conducted within the sportswear market in the Middle East between 2011 and 2022.

 

Overview of the Middle East Sportswear Market

Key Segments of the Industry

  • Sportswear in the Middle East maintained a market size of $5 billion in 2020 with more than 6% CAGR; it is projected to reach more than $17 billion by 2028.
  • Puma led the overall sportswear market in 2020 with market share followed by Nike and Adidas.
  • Women’s sports clothing is one of the crucial categories of sportswear that has growth potential. The sector is forecast to expand at a CAGR of 7% between 2021 and 2025.
  • The COVID-19 pandemic in 2020 affected the wealth and wellness market, which drove sportswear manufacturers to expand into new verticals and product offerings.
  • Strategic partnerships and the technology in the textile industry will grow the market.

The Middle East’s Sportswear Market by Key Categories

The sportswear market is categorized into sports clothing, sports footwear, and sports accessories. Sports clothing accounted for the largest share in 2020, followed by sports footwear and sports accessories. Sports clothing share has been increasing and it is expected to grow at a slow pace during the forecast period.

  • The Middle East’s sports clothing includes women’s wear, men’s wear, and children’s wear, with a 57% market share. Women’s wear is expected to show the highest growth rate during the forecast period. In 2020, activewear was the dominating sportswear type, followed by sports-inspired cTasual wear and technical sportswear types.
  • The Middle East’s sports footwear includes women’s footwear, men’s footwear, and children’s footwear, with a 32% market share. Women’s footwear is expected to show the highest growth rate during the forecast period, while children’s footwear showed the lowest growth rate.
  • The Middle East’s sports accessories include bags, sunglasses, hats, scarves, gloves, belts, and other accessories. Sports accessories have 11% of the market share. In 2020, sports-inspired casual wear was the dominating sports accessories type, followed by technical and active sports accessory types.
  • Global capital deployed in the sportswear sector increased by 262% between 2012 and 2022.
  • In the sector, $10.432 billion was deployed across 178 deals, with an average deal size of $586 million. Significant acquisitions in 2012, 2019, and 2020 drove the fluctuations within the amount of deployed capital.
  • The 2020 focus on health and wellness, due to the global pandemic, led to a spike in deal flow in the sector. In that year 14 deals were done in the space and over $5 billion was invested in the sector.
  • There was a notable decrease in 2021, but in the first five months of 2022 over $2 billion has been invested into the sector, a trend that J&A anticipates will continue.
  • So far in 2022, eight IPO deals were announced in the sportswear sector in the Middle East.
  • Over 80 deals occurred within the private equity sector showing the growing maturity of the market. Venture and pre-venture capital represented 45% of capital deployed in the sector (113 deals). This trend highlights the potential in the sportswear sector as new entrances into the market receive notable capital deployment.
  • There were 48 mergers and acquisitions announced within the sportswear sector. This indicates that there are large firms that are interested in mergers and acquisitions deals.

Deal Spotlight: The Giving Movement


THE COMPANY

Dominic Nowell-Barnes made the UAE his home in 2017, where he found his purpose for making a change. Seeing the fashion industry’s impact on climate changes and in some areas unethical practices he made it his mission to create a vehicle of positive change that everyone can be a part of. The Giving Movement launched in April 2020, created as a way to alter the way fashion is consumed and to shed light on conscious consumerism. The goal was to create a new model where sustainability is curated for youth, a disruptive brand that creates meaningful apparel — making an impact with every purchase.

RECENT FUNDRAISING

The Giving Movement, a sustainable sportswear company, raised $15 million of Series A venture funding in a deal led by Knuru Capital on March 13, 2022. Other undisclosed investors also participated in the round. The funds will be used to further its category growth to include children’s wear, and the recently announced baby wear lines, as it eyes expansion into new markets.

Global trends towards health and wellness will continue to drive demand for sportswear products. J&A predicts a continued increase in capital market activity within the sportswear sector in the Middle East as economies become more interconnected and companies expand into new international markets.
Sources: PitchBook Data, Data Bridge, Global Data.


Cross Border Investments: The Middle East and China

The Middle East and China

This report investigates cross-border investments made between the Middle East and China since 2020. The Middle East serves as a strategic economic hub due to the strength of the energy sector and geographic positioning. Countries like the United Arab Emirates and the Kingdom of Saudi Arabia have held strong historic ties to the West, but are experiencing increased levels of economic relations with China. With current oil and gas shortages and rapidly increasing prices, the Middle East will continue to be a valuable economic battleground.

Capital deployed by Chinese-based investors in the Middle East focused on early-stage companies, with 81% of deals in the sector occurring in venture capital transactions. This highlights the desire to invest in the future growth of the region.
Many deals in the sector are unannounced, so this data may under-represent actual deal volume and size. This report outlines the type, deal count, dollar volume, and industries of Chinese investments in Middle Eastern companies. 

Chinese Investors Capital Market Activity: Middle Eastern Companies

Since 2020, 132 cross-border deals were announced between Chinese investors and Middle Eastern-based companies, in which a total of $9.7 billion was deployed. The chart below shows the deal count and capital raised in this cross-border category.

  • Deal count within the sector remained consistently ranged between 10 and 20 deals per quarter, with a mean value of$7.35 million. Chinese investors’ mean value of deals with Middle Eastern companies has increased over time, showing an increased appetite to invest in the Middle East.
  • The graph excludes the $4.31 billion secondary investment into Saudi Aramco (pipeline business) conducted by China Merchant Capital and Silk Round Fund, as well as a syndicate of other institutional investors including BlackRock, which skews the data.
  • Capital deployment peaked in Q1 2021 with a total of $4.74 billion, including the secondary transaction into Saudi Aramco (pipeline business), and over 14 investments. In 2020, Q1, which largely occurred before the pandemic, was the next most active period.
  • Information technology was a leading sector for deal counts conducted by Chinese investors in Middle Eastern companies. Over 45% of transactions in the categories were in the information technology sector, though it received less than 13% of capital deployment.
  • The energy sector received the most significant capital deployment of over 44%, mostly due to the Saudi Aramco transaction.
  • The healthcare sector received significant capital, 27%, through 27% of deals conducted by Chinese investors. This shows the high level of interest that Chinese investors have in the Middle Eastern healthcare sector.
  • Chinese investors deployed $3.37 billion into venture capital deals in the Middle East since 2020 in over 107 transactions. Of the total deal flow, 36% went into later-stage venture capital deals while early-stage venture capital and seed investments received 34% and 11%of the deal count, respectively.
  • The secondary deals sector received the most significant capital deployment of over 45%, mostly due to the Saudi Aramco transaction, but contributed to less than 5%of the total deal count.

Investor Spotlight: MSA Capital


The Company

MSA Capital, formally known as Magic Stone Alternative Investments, was founded in 2014 and has made 127 investments. MSA Capital is headquartered in Beijing, China, and invests in global companies from seed to early growth phases.

  • MSA Capital completed 10 deals since 2020 with Middle Eastern companies.
  • MSA Capital has an industry focus on apparel and accessories, commercial services, healthcare technology, pharmaceutical and biotechnology, retail, and software.
  • The firm’s median capital invested is $15.6 million and has deployed capital into 53 companies in the last 12 months.
The expansion of capital market activity between the Middle East and China is something that firms in both regions will help drive growth in global markets. Large energy deals dominated total capital deployment by Chinese investors into Middle Eastern companies since 2020. However, over 80% of deals in the sector were in venture capital deals, demonstrating how the demand to invest in the future of the region. J&A expects the capital market activity between China and the Middle East to increase over time as these emerging markets continue to develop.


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