Crescent in mix to buy Healius medical centres

Australia-based private equity firm Crescent Capital is said to be in the final mix to buy Healius’s medical centres division.

It comes after DataRoom reported on Wednesday that British private equity fund Permira was understood to have bowed out of the competition for the assets, which are up for sale through investment banks Morgan Stanley and UBS.

Crescent is said to be interested in the business so it can boost its own pathology revenue through referrals from GPs at the Healius medical centre clinics. Referrals from Healius medical centres to its own pathology arm are thought to be responsible for about 5 per cent of the group’s revenues.

In an ironic twist, Healius was last year said to be interested in buying pathology business Australian Clinical Labs, of which Crescent is a major owner, in a strategic move . (ACL is a roll-up of businesses that include the pathology operations formerly owned by St John of God and Perth Pathology.)

Exactly what price Crescent has put forward to buy the medical centre operation is unclear, but some suggest it could ascribe a value of less than $400m to the operation, well below the $500m to $600m the company had earlier indicated was the ballpark for bidders.

Permira was exploring an acquisition of the medical centres along with BGH Capital, while DataRoom now understands that Brookfield was weighing an acquisition of the business about two weeks ago.

Indicative bids were due last week. Earlier, expectations were that the company was asking for a suitor to pay between eight and 10 times the EBITDA of the division.

Macquarie Capital is understood to be working as adviser for BGH, but it remains unclear whether BGH is still pursuing an acquisition. The Australian private equity firm is pursuing the collapsed airline Virgin Australia and made a takeover bid for Village Roadshow at the beginning of the year.

Healius has been pressing ahead with the sale of its medical centres despite adverse trading conditions linked to COVID-19. It had earlier encountered strong interest for the medical centres and was confident it would achieve an outcome.

Healius is selling the centres after it this year rejected a $2.1bn takeover bid by Partners Group, which planned to buy a 15.9 per cent stake in Healius from China’s Jangho group, attracted to its pathology arm. Partners is one of the largest providers in Europe.

Healius has about 96 medical centres and day hospitals, with a total of 2541 sites, including some that offer pathology and diagnostic imaging services.

Healthscope is also selling its pathology operations across the Tasman, which are said to have a book value of up to $550m.