Permira’s hopes of $3bn for I-MED sale defy health sector challenges

Permira purchased I-MED in 2018 for $1.3bn. Picture: iStock

Permira is believed to be working towards a September sale process launch for I-MED, with hopes a buyer will hand over at least $3bn for the country’s largest diagnostic imaging provider.

DataRoom revealed that Morgan Stanley was poised to be hired to sell I-MED, and reported in February that Bain Capital and Morgan Stanley Infrastructure Partners have been interested suitors.

Jefferies Australia has since been added to the ticket.

At the time, this column reported that the business was set to be placed up for sale in the second half of this year. While deal-makers report that some infrastructure funds have stepped back from the healthcare sector at the current time as the industry struggles to improve margins, Bain and MSI are understood to continue to be keen on I-MED.

I-MED is understood to be forecast to generate about $250m of earnings before interest, tax, depreciation and amortisation.

DataRoom reported in 2021 that I-MED then held some informal meetings with core-plus infrastructure investors, as Morgan Stanley aided the group.

It had also offered top radiologists an opportunity to buy into the business.

Permira purchased I-MED in 2018 for $1.3bn, or 11 times its earnings from EQT.

When it was for sale then, its annual EBITDA on a historical basis was about $120m and its annual revenue was $639m.

It is Australia’s largest medical imaging network with more than 230 clinics in metropolitan, regional and rural areas throughout the country.

In 2021, market analysts suspected that I-MED could sell for about 14 times its EBITDA, but it’s now a different market where diagnostic imaging, like all areas of the healthcare industry, has been working hard to get costs down and increase earnings.

Morgan Stanley Infrastructure had also been running the ruler over Healius in late 2022, and the Healius diagnostic imaging unit is now for sale.

A frontrunner for the $700m unit is considered to be IFM, which lobbed a bid in the past fortnight, while TPG Capital, Bain Capital and other buyout funds have shown interest.

Meanwhile, some market participants paid close attention to last week’s ASX announcement by Wesfarmers that said it had appointed Kate Munnings as a director.

She’s the former boss of IVF provider Virtus Health and chief operating officer of Ramsay Healthcare. The $11bn Ramsay is trading at five-year lows, shares of the $80bn Wesfarmers are soaring, and there was speculation in the market several months ago that the Perth-based conglomerate was paying close attention to the country’s largest private hospital operator with the view of a potential buyout should the price be right.