JPMorgan and Credit Suisse now Aveo players

Investment banks JPMorgan and Credit Suisse have emerged in and around the action for the sales process of the $1.08 billion retirement village operator Aveo.

It is understood JPMorgan is funding a tilt by Blackstone.

Blackstone’s involvement in the process was first revealed by DataRoom, although some had suspected in recent days that it may have no longer been in the mix, but that is now not thought to be the case.

Credit Suisse is also understood to be providing funding for what is thought to be one of two groups competing to buy the Bank of America Merrill Lynch-advised company.

Apparently, Aveo’s management team had recently been expressing confidence in the way the sales process was progressing.

Parties currently have access to a data room, and the big test will be what the price buyout funds will be prepared to pay for the operation.

Earlier, some had questioned how easy it would be for suitors to lock in attractive funding packages given the nature of the cashflow for retirement operators. However, the attraction for private equity is said to be the opportunity to secure cashflow from the retirement villages once they are sold.

Currently, Aveo has about $600 million of existing debt so the expectation is that a private equity firm would add an additional $200m of debt on any deal. The thinking is that if suitors do not pay up for the business, a privatisation by its Malaysian shareholder Mulpha could be on the cards, although another option is that Mulpha jointly owns the business with a private equity firm.

Other parties that were earlier vying for the asset were Brookfield and Cerberus and their current status in the competition remains unclear.

Lone Star is out of the contest.

Aveo has 93 retirement communities but operates just four aged-care facilities.

A challenge will be a class action looming over the move to change the status of residents’ properties from freehold to leasehold titles.

Mulpha owns a 24.4 per cent stake in the business and its intentions are unclear.

Expectations are that the company would likely sell for about $2.75 per share, which is below its net tangible assets of $3.83.

Shares in the business closed at $1.93.