How big will mental healthcare -elated M&A get in Covid’s wake? A recent KKR investment could show the way. KKR announced plans to start a mental health company yesterday. Geode Health will work with psychologists, psychiatrists and therapists to provide outpatient mental health services virtually and in person. As individuals cope with a global pandemic, the private equity firm is one of many betting on increased need for treatment.

The new company will step into a gap between the 20 percent of Americans with mental illness and the more limited service options available to them, incoming CEO Gaurav Bhattacharyya said in a press release. The firm will be funded via KKR’s Health Care Strategic Growth strategy.

The company’s founding comes as private equity plays a growing role in behavioral healthcare M&A. Mental health related M&A grew from 19 deals in 2018 to 30 in 2020, of which 12 were announced in Q4, according to healthcare investment bank Mertz Taggart. In the broader category of behavioral health, of which mental health is part, private equity snagged a majority of deal activity last year.

The trend could continue as companies jockey to secure their share of an estimated $100 billion market. Bhattacharyya said the space remains fragmented, indicating additional opportunities for consolidation.

Just yesterday, digital health technology platform UpHealth announced it had closed its combination with Gig2Capital and Cloudbreak Health. UpHealth faces healthcare providers and payers treating behavioral and medical issues.

Read more about the deal here: KKR Creates, Invests in Mental Health Firm Geode Health.