Brookfield sales keeping Morgan Stanley busy

Brookfield is testing buyer interest in Healthscope.

Brookfield’s lender, Morgan Stanley, is now on the ticket for more than $6bn worth of assets that it has had on the market, calling into question what the future is in Australia for the North American private equity firm.

Brookfield, which has its roots in Canada and is close to the country’s pension industry, has been one of the most prolific investors in Australia in recent years, most recently offering more than $3bn for wealth manager Insignia Fin­ancial before retreating from a three-way bidding war and making a $16bn buyout proposal for Origin Energy that was rejected.

Now it has Healthscope for sale as it struggles to pay back $1.4bn of debt, and this week it hired Morgan Stanley and UBS to sell La Trobe Financial, which comes with a $3bn asking price.

Morgan Stanley, a lender to Brookfield’s cash-strapped business Healthscope, is also working to sell its retirement living business Aveo, with help from Barrenjoey.

A year ago Morgan Stanley was looking for a buyer for Brookfield’s builder, Multiplex, which came with an asking price of $400m, yet there were no takers.

It may call into question whether Brookfield exiting Australia, but sources say the raft of asset sales are more a product of all the businesses being held in private equity funds reaching the end of their lives.

Healthscope was a special situation, where it was testing buyer interest on the business that the private equity firm concedes has no equity left in it.

Morgan Stanley and MUFG are sellers of loans to the business this week, but sources say with the debt parcels offered being of such small sizes, major US hedge funds such as Avenue Capital and Canyon Partners were unlikely to be buyers.

Metrics Credit is a lender to Healthscope and was this week weighing a move to buy Morgan Stanley’s loans.

Lenders holding close to 70 per cent of the loans have agreed to give Healthscope an interest payment holiday until May, when bids for the business are due.

The remaining 30 per cent are offloading their positions, with Sumitomo Mitsui Banking Corporation selling its debt for just over 40c in the dollar to Deutsche Bank, which may be working for one of Healthscope’s landlords, HMC Capital.

Healthscope is on track to make a $45m free cashflow loss for the year to June, and hospitals that it does not own lose close to $100m a year while those it owns itself are profitable.

It has 38 hospitals, 22 of which are owned by HMC Capital and Northwest Healthcare Properties.