BGH Capital is believed to be on its way to building a major alternative healthcare services business that could list on the ASX in up to five years’ time for as much as $2bn.
It comes after Healius confirmed BGH Capital was the buyer of its medical centres division after DataRoom first tipped it was bidding for the business on March 2, and exclusively revealed it was closing in on an acquisition on June 9.
BGH Capital has outlaid $500m for the business, which has grown to include more than 86 centres, but it will not be taking away the day hospitals, which some still believe could be sold at a later stage, or the IVF clinics, which sit within the division.
The price was better than many had expected, sending the Healius share price soaring more than 18 per cent higher.
The deal leaves questions over whether Partners Group returns to the negotiating table to buy Healius after an earlier $2.1bn takeover bid was rejected by the target’s board, given its market value — around $1.6bn — is close to what it was at the start of the year when it made its offer.
DataRoom also revealed on September 16 that BGH was closing in on New Zealand dental care business Abano Healthcare with its backers for $NZ300m. It abandoned plans to buy that business in March because of COVID-19. However, acquisition talks have resumed.
After purchases of the Healius assets and Abano are finalised, the expectation is that it will go in search of other bolt-on acquisitions.
Soon to be on the market in the healthcare space are Quadrant Private Equity’s business Qscan Australian radiology business and Everlight Radiology. Talks have been held involving Henry Bateman, son of the late Healius founder Ed Bateman, who has a medical centre business Cornerstone Health, so one possibility is that those operations could be folded into the mix.
BGH is believed to be looking to build a major healthcare provider as the sector remains in favour with private equity firms and other investors, attracted to the growing earnings that are related to an ageing population demographic. Assets in the space are strongly sought, commanding top dollar from buyers, and the thinking is that a float or a sale of a major healthcare group that has synergies would be attractive.
The deal by BGH comes after it recently abandoned plans to buy Virgin Australia and as it is expected to bid for the NAB’s MLC wealth management business, for which bids are due on Friday in a process run by Morgan Stanley and Macquarie Capital.
BGH was founded by former TPG Capital executives Ben Gray and Simon Harle and former Macquarie Capital boss Robin Bishop. It raised $2.6bn in 2018 and is believed to be eager to put the funds to work.
Macquarie Capital advised on its Healius Medical Centre acquisition, while Goldman Sachs and JPMorgan are assisting with a bid to acquire the cinema and theme-park owner Village Roadshow for more than $400m.
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