European private equity mulls Ramsay Health Care buyout

Ramsay Health Care is the country’s largest private hospital group.

A European private equity firm is understood to be running the ruler over the $10bn Ramsay Health Care, with an eye to becoming the second group in two years to launch a buyout proposal for the nation’s largest private hospital operator.

Ramsay last week flagged that it would deliver weaker-than-expected earnings for the full year as it wrote down the value of its European operation.

The hospital operator, which is scheduled to release its full-year results on August 30, told the ASX last Monday that its underlying net profit was expected to be in the range of $265 to $270m, compared with $278.2m the previous year.

Ramsay was considered a takeover target earlier this year, with the Perth-based conglomerate Wesfarmers known to be running the ruler over the business some time ago.

It is understood that Wesfarmers, which recently appointed Ramsay’s former chief operating officer Kate Munnings, to its board carried out extensive and detailed work on a potential buyout of Ramsay and an acquisition of the country’s largest diagnostic imaging provider I-MED, which is expected to be put on the block next month for about $3bn through Morgan Stanley and Jefferies.

However, Wesfarmers thought Ramsay would have to be far cheaper before it would make its move – despite Ramsay’s share price being at its lowest level in a decade, about a third cheaper than it was after Kohlberg Kravis Roberts bid for the business in 2022.

Some think the European suitor may be CVC, while Partners Group, which is also based in Europe, has looked at Australian healthcare company Healius, and EQT could also be an acquirer.

Other European funds that invest in healthcare include Permira, PAI and Intermediate Capital.

Some think a company with real estate expertise would be the most likely to have interest because of Ramsay’s lucrative portfolio of hospital assets in Australia.

There’s also a view that any deal involving Ramsay would unfold after it has demerged or sold its Ramsay Sante operation in Europe.

Ramsay, whose David Thodey-led board recently appointed former Woolworths executive Natalie Davis as chief executive to replace Craig McNally, has been trying to find a solution for that part of the company, which has lagged in performance.

Ramsay Health Care owns 52.79 per cent of Ramsay Sante, the second-largest private care provider in Europe, and a sale would help to reduce its $4.7bn of debt.

Buyers are not interested in the whole business, but it could try to sell a stake.