Pacific Equity Partners expresses interest in RetireAustralia

RetireAustralia is testing buyer interest through investment bank Jefferies.

Pacific Equity Partners is understood to have approached RetireAustralia with an informal offer to buy the business that is up for sale through investment bank Jefferies.

It comes after sources had suggested that parties had made informal offers for the retirement village operator.

Others understood to have shown interest are Lendlease and Aware Super-backed operator Keyton, along with Kohlberg Kravis Roberts.

The understanding is that offers have been opportunistic and likely below book value, which is understood to sit below about $800m.

Whether the bids put forward by PEP would be enough to woo owners that include the ASX-listed Infratil and the New Zealand Superannuation Fund is a different story, after trying to sell the operator a year ago.

That was on the back of EQT paying $987m for Stockland’s rival business but the market demand later in the year weakened.

Keyton, the business that shareholder Lendlease is selling out of, offered about $700m last year for RetireAustralia when it was on the market. But the asking price was closer to $1bn.

RetireAustralia’s owners are not believed to be running a formal sale process but are being provided with financial information on request.

In recent months, Jefferies has been out in the market talking to parties which might be buyers – to determine the level of interest there would be for the country’s fifth largest retirement village operator with about 29 facilities and at what price.

PEP’s interest is through its Secure Asset Fund and is a year on from when it purchased land lease business Serenitas with Mirvac Group for $1bn.

It comes as the Sydney-based private equity firm remains active in the market, lining up to assess a purchase of Waste Services Group, circling the $1bn childcare business Guardian Early Learning, and the Healius diagnostic imaging business.

It has also hired RBC and Azure Capital for a possible sale of its own $1bn-plus Zenith Energy business.

Zenith generates about $120m of annual earnings before interest, tax, depreciation and amortisation.

Also up for sale is retirement living business Aveo through Morgan Stanley and Barrenjoey, on behalf of owner Brookfield, and the asking price is thought to be about $3bn.

There’s no formal sale process that’s been launched yet, but promotional material is out in the form of a flyer.

Bankers from Barrenjoey and Morgan Stanley that are selling the business have reached out to about 40 or 50 prospective buyers and have carried out some educational meetings about the business.

Brookfield purchased the then listed Aveo in 2019 for $1.3bn, or $2bn including debt.

Aveo describes itself as Australia’s premier retirement living provider with 86 retirement facilities across the eastern seaboard and the provider of personal and flexible home care.

There’s a view that Brookfield is likely to meet the market when it comes to price, and the Canadian private equity firm is likely to be keen to crystallise a sale in the sector.

It recently tried to sell holiday resort chain Center Parcs in the United Kingdom for £4bn but later withdrew the business from the market and is trying to sell Atlantis Paradise Island in the Bahamas for a reported $US2.5bn.

Crystallising a sale makes it easier to raise future funds, in what some believe was the logic behind Macquarie Asset Management’s massive sale of data-centre provider AirTrunk last week.

Blackstone and its Canadian pension fund backers snapped up 88 per cent of the business, as largely anticipated from the start of the contest, paying a price that values the Robin Khuda-founded business at $24bn.

The move to test interest for RetireAustralia comes after Goldman Sachs-advised Stonepeak in July swooped on New Zealand-listed retirement and aged-care provider Arvida, offering $NZ1.3bn ($1.17bn).

It offered the same amount some months back but was rejected.