Estia Health founder Peter Arvanitis defiant despite horror ASX debut

The founder of aged care operator Estia Health, Peter Arvanitis, brushed off a horror sharemarket debut that wiped $176 million from the company's initial $1 billion value, claiming that for long-term investors "pricing is irrelevant".

"I really don't pay much attention to market prices," Mr Arvanitis said.

The successes of Regis Healthcare and Japara Healthcare may lure more to the market. Credit: Nic Walker

Now a director and largest investor, Mr Arvanitis reaped $49 million in cash from the float, but watched the value of his stake fall $14 million to $66 million. "Fluctuations ... are not important to us," he said. "We're looking at long-term developments in the sector."

After Mr Arvanitis rang the bell at the Australian Securities Exchange at midday on Friday, the stock fell as low as $4.73 from the offer price of $5.75. Trading under the code EHE, the stock finished down 17.6 per cent to $4.74.

For floats of more than $US200 million ($239 million) in value, the Quadrant Private Equity-backed Estia was the worst debutante of 2014 so far, measured by the day one percentage fall, Dealogic said.

Mr Arvanitis and Estia chief executive Paul Gregersen had no explanation for the slump. "I don't think anything has changed overnight, fundamentally," Mr Gregersen said. "People were confident leading into the listing."

The disappointing float caps off an otherwise successful run for Quadrant, which sold 38.3 per cent of its holding into the $725 million raising. The fund's $425 million listing of Virtus Health in June 2013 was lauded as the float that sparked the latest initial public offering run. It has listed three other companies in the past year. A Quadrant representative did not comment.

Estia, which runs 39 centres and has 3900 beds, had been slated to list early in 2015, but Quadrant rushed the float after seeing the success of Japara Healthcare and Regis Healthcare.

The offer was priced at a price-earnings ratio of 21-times profit in 2015-2016. Analysts said this put it at only a slight discount to its listed rivals.

Japara, which began the trend of aged care floats April, has had a horror week. It lost 10 per cent on Tuesday after it revealed a $5 million payroll blunder.

Estia was not a recipient of any new aged care bed licences, which were handed out on Thursday. Japara and Regis, however, lifted 3 per cent and 2 per cent respectively on Friday after the news, in which the government also said it would consider lifting caps on beds.

Mr Gregersen said he could not explain why Estia missed out, but said prospectus forecasts did not rely on new beds. "It was the first time we had applied," he said. "We will go back to department and ask why we were unsuccessful."

The company expects revenue of $284 million and earnings before interest and tax of $27 million in 2015-2016.

Mr Arvanitis, who describes himself as an entrepreneur with a background in property, transport and agriculture, established Estia in 2005. "We run a very sound business that has enormous growth in front of it," he said.

Quadrant acquired the business, which was then just 13 facilities in Victoria, in October 2013. It merged with Cook Care, which operates in NSW and Queensland, and Padman Health Care from South Australia, in July.