Bain Capital cools on Permira’s I-MED

Diagnostic imaging is an attractive sector for private equity buyers.

Macquarie Asset Management could soon be the last party standing in the $3bn-plus contest to buy the country’s largest diagnostic imaging company, I-MED, if the talk in the market can be believed.

The understanding is that Bain Capital has been cooling on the opportunity as it also assesses an acquisition of TPG Capital’s Asian business Novotech, and there’s talk it could also be looking at Waste Services Group, on the market through UBS.

While Bain is still in the mix for I-MED, that may not be the case for long, with the chatter being that it will not be in a position to move on all three opportunities, and may walk away from one of them.

Other reasons why it is getting cold feet on I-MED is that it is nervous about market regulatory risks, with concern that with artificial intelligence creating more efficiency, the market may change pricing.

Meanwhile, Macquarie Asset Management is in deep due diligence on the asset, with about two weeks to go before it lobs its final offer.

MAM, while still interested in I-MED, may also be growing doubtful it can justify the company’s bullish price expectations because of fears surrounding high doctor turnover and that the business does not justify a premium price.

TPG Capital is out of the mix, but it may return should parties fall away and price expectations come down.

Pacific Equity Partners has also taken a look after being an under bidder to Affinity Equity Partners, which purchased Lumus Imaging from Healius for $965m.

Partners Group has also been around the hoop.

I-MED is the largest diagnostic imaging service provider in Australia and its owner, Permira, has placed the business up for sale through investment banks Jefferies Australia and Morgan Stanley.

Private equity firms have been interested in the sector with the hope that the growing use of artificial intelligence can create greater earnings opportunities.

Interested buyers first came forward to Permira with indicative offers before a formal process was launched where parties were allowed to carry out due diligence.

I-MED is understood to be forecast to generate about $250m of earnings before interest, tax, depreciation and amortisation.

Permira purchased I-MED in 2018 for $1.3bn, or 11 times its earnings from EQT.

It has more than 240 clinics across Australia.