There appears to be a new favourite in the contest for the Healius diagnostic imaging unit, with Affinity Equity Partners coming from left field to storm home with a final bid for the business worth about $700m.
There have been doubts about whether Affinity was even still in for the contest in the last round, with conflicting reports in the market and the Asian buyout fund playing it coy on its intentions, leading some to believe it may have abandoned the plan to buy the unit known as Lumus.
But DataRoom understands that Affinity has been working on an offer with Dean Lewsam, the former Healius executive who ran the Healius diagnostic imaging operations until 2022, and some even believe it’s now in pole position and anticipated to win the race.
However, it’s wise not to discount TPG Capital, which is also understood to be very keen on the operation and had previously been considered the party to beat in the later stages, while Pacific Equity Partners also put forward a final bid.
Judging from the offers in the contest’s first round, which were only a few percentage points apart from each other, it could be a close auction.
Bidders are expected to know the outcome by next week.
The understanding is that Affinity’s offer values the business at $700m.
It is understood that the asking price by Healius was $700m excluding costs or on a net basis, but on a gross basis, it could be close to $800m.
Final offers were due Wednesday.
Affinity is also sharply focused on buying Waste Services Group, through adviser Barrenjoey, another auction attracting private equity bidders such as PEP and EQT, that could be worth about $1bn, and this partly put others off the scent on its interest around Lumus Imaging.
The asking price is understood to equate to about 10 times its annual earnings before interest, tax, depreciation and amortisation forecast of about $70m.
PEP, which owns private hospital operator Healthe Care, is advised by Bank of America and Stanton Road Partners.
Healius, with a $1.2bn market value, is selling its Lumus Imaging unit to drive down its debt and fund its pathology arm, despite the imaging operation being the stronger performer.
Private equity is drawn to the space by the opportunities to create further earnings upside through artificial intelligence.
Lumus Imaging is the nation’s third-largest diagnostic imaging operation behind Sonic and Permira’s I-MED, which is also for sale.
Healius shares were up 1c before Wednesday’s close at $1.69.
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