Former TPG boss Ben Gray repeats his operating model

Ben Gray led TPG’s previous investment in Healthscope. Picture: Britta Campion

Former TPG Capital Australia boss Ben Gray appears to be planning to repeat his private equity success with the $4.1 billion takeover bid he has made for Healthscope through his newly launched fund, BGH Capital.

The private equity veteran has made millions of dollars for his investors over the years through acquiring companies, selling off the property portfolio for a windfall before later listing the operating businesses.

With more than $2.5 billion raised in his first fund through his new firm BGH Capital, he well positioned to enjoy similar success with applying the same strategy to Healthscope.

Owned by Healthscope — the country’s second largest private hospital operator — is a lucrative portfolio of about 32 hospitals worth more than $1 billion.

A sale of the assets was explored when TPG Capital and The Carlyle Group floated the business in 2014.

However, then, a decision was made to retain the properties for the time being, which creates an easy money making opportunity for the private equity veteran now.

This is particularly the case given the level of familiarity that he has with the business.

Mr Gray and his offsider Simon Harle jointly led TPG’s previous investment in Healthscope, buying the business with The Carlyle Group it for $2.7 billion in 2010.

They sold it four years later via an initial public offering for $3.6 billion.

He also made a windfall through the acquisition of Myer.

While investors got burnt after buying shares in the department store chain when it was floated by TPG Capital and its backers, there is no question that the private equity firm did well out of the opportunity, which perhaps added further salt in the wounds of many fund managers that suffered from the float.

Myer was purchased for $1.4bn around 2006, and after selling the property assets, TPG received more than $500m when they distributed surplus capital back to shareholders and paid a fully franked dividend.

It floated the business in 2009, raising $2bn with a $2.8bn market value.

And it was a similar situation with Inghams, which was acquired for $880m then sold only a few years later through a $600m-odd IPO with a $1.2bn market value.

Not long before the IPO, TPG had already made $550m through a sale of the Inghams properties.

The investors that are backing Mr Gray’s new business proves the strategy is one that is well supported.

BGH Capital, which also counts Mr Harle and former Macquarie Capital investment banking boss Robin Bishop as among its partners, counts Australian Super, Singapore’s sovereign wealth fund GIC, the Canada Pension Plan Investment Board and Ontario Teachers as among its investors — groups which are also joining with BGH Capital on its takeover bid.