Private equity firm BGH Capital is believed to be preparing to bring its primary healthcare business to market in the coming months, and with strong earnings some believe the price tag could be north of $1bn.
ForHealth operates more than 80 large-scale, multidisciplinary medical centres, providing critical primary care services, including general practitioners, dental, specialist, diagnostic imaging, pathology, allied health and pharmacy services.
The business partners with more than 1400 independent practitioners to provide more than eight million consultations annually.
BGH, a Melbourne-based buyout fund headed by ex-TPG Capital executives Ben Gray and Simon Harle and former Macquarie banker Robin Bishop, has been successful in raising capital for investment since it launched in 2018, securing $2.6bn for its first fund, but is yet to prove itself when it comes to making a profit on its acquisitions.
ForHealth arose from the medical centres division that BGH Capital purchased from Healius in 2020 for about $500m.
When sold they had been generating $30m of annual earnings before interest, tax, depreciation and amortisation. Now the talk is that the figure may be $100m annually.
Earlier, the expectation was that BGH could float the business, but now a trade sale to a large global private equity healthcare industry investor like Sweden’s EQT is seen as likely.
An IPO could be a back-up plan once the market improves for listings.
Medicare Urgent Care Clinics have drive a rise in performance in the embattled healthcare sector, which had struggled to gain strong margins and attract general practitioners.
In the 2023 budget, the federal government announced $358.5m over five years to establish 58 Medicare UCCs, to reduce pressure on hospitals and emergency departments.
The 58 UCCs were established last year.
BGH has been a major provider of those clinics, which receive funding from the government.
A sale of the ForHealth business would set the scene for a busier second half of the year for sale processes run by private equity firms.
Other outfits that could soon hit the market are CyberCX, which is also owned by BGH Capital, I-Med Radiology Network, owned by Permira and advised by Morgan Stanley, and Quadrant Private Equity has been considering a sale of Darrell Lea confectionery owner The Rite Bite Group, subject to the rising cost of cocoa.
Pallet pooling company Loscam is also expected to be brought back to market in the coming months by owner China Merchants.
Expectations are that Kohlberg Kravis Roberts will be a keen buyer and may integrate the Loscam business with its own Goodpack packaging company in Asia, which it has tried to sell in recent years.
China Merchants put the Australia and New Zealand operations of Loscam up for sale over a year ago, but bids came in below its expectations.
Now the plan may be to include the Southeast Asian division, which is more attractive to prospective buyers because of growth opportunities.
When the Australian and NZ arm was for sale last time, it was understood to have been generating about $100m of annual EBITDA and it is believed that the asking price was close to the $2bn mark.
Back then, Queensland Investment Corp, Brookfield, Igneo, Pacific Equities Partners and KKR expressed their interest.
A deal including the Southeast Asian operation would make it far more valuable.
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