Private equity firms assess merits of Aveo buy

Established in 1970, Aveo has 86 retirement facilities along the eastern seaboard.

A number of private equity firms are now casting their eye over Aveo ahead of bids due in mid-December for the $3bn-plus retirement village operator, up for sale through Barrenjoey and Morgan Stanley.

It is understood that a number of parties are in the data room taking a look at the business, including private equity firms EQT and Blackstone, while the Lendlease-backed Keyton Retirement Villages and potentially Stonepeak have taken information memorandums to assess the merits of an acquisition.

The question is what groups are serious.

Earlier, DataRoom reported that Pacific Equity Partners was also interested, as it also carries out exclusive due diligence on aged care provider Opal.

The Aveo business is owned by Canadian private equity firm Brookfield had opened a data room for prospective suitors and issued an information memorandum at the start of this month. Parties can come back to Brookfield with an indication of what they would be prepared to pay by mid-December.

In recent months PEP ran the ruler over Aveo’s rival, RetireAustralia.

However, the understanding is that it was only prepared to pay about 25 per cent below the asking price and never followed through on a deal.

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

Aveo has a deferred management fee model where income is back-ended, and infrastructure companies are more willing to underwrite the annuity of the cash flows over time. Established in 1970, Aveo has 86 retirement facilities along the eastern seaboard, including independent living units and serviced apartments. It has 4 per cent market share, ahead of Lendlease with 1.9 per cent and Bolton Clarke with 1 per cent, according to IBISWorld.