Cura Group a healthy new target for private equity investors

Cura is 70 per cent owned by Fresenius Medical Care, which purchased the stake in 2017 from Intermediate Capital.

Healthcare is one of the happiest hunting grounds for private equity buyers, and those wondering what the next opportunity could be may not need look further than Cura Group.

The owner of private day hospitals in Australia is a subsidiary of German healthcare company Fresenius.

Fresenius, which is listed in Germany, has been subject to shareholder activism, with activist fund manager Elliott Investment Management on its share register.

Elliott bought in around October, about the time Fresenius appointed a new chief executive, Michael Sen.

According to offshore reports, Fresenius has been under pressure to make changes after it cut its 2022 financial earnings estimates.

Mr Sen had been conducting an extensive review of all the company’s businesses.

Elliott Management holds a short position in the stock, which is largely a bet that shares in the company will fall.

In past instances when Elliott has joined the register of boards (such as BHP), it has lobbied for asset sales by the target companies.

Global groups under attack by activist investors are under pressure to sell off assets far from their home markets and return the money closer to home.

Cura is 70 per cent owned by Fresenius Medical Care, which purchased the stake in 2017 from Intermediate Capital for a price believed to value the company at more than $400m.

It is the largest day hospital owner across Australia, with 19 assets, and in the financial year before it was purchased by Fresenius in 2016, it was generating $127m of revenue.

Cura was one of the bidders for the Healius day centres that recently sold to Queensland Investment Corp, which owns day hospital business Nexus.

Judging by the level of interest in that sale process, should Cura hit the market it is unlikely to have any trouble finding a buyer – and it is most likely one will emerge out of the world of private equity.