Cancer care provider Icon Group is believed to be making plans for either a sale or listing in the new year as part of a dual-track process.
Icon Group — Australia’s largest dedicated cancer care provider — was sold by Quadrant Private Equity in 2017 to a consortium including the Queensland Investment Corp, Goldman Sachs Private Equity and China’s Pagoda Investments for $1.2bn.
It is understood annual earnings before interest, tax, depreciation and amortisation of the business have since doubled from that time when it was making about $80m.
Boosting the bottom line by about $20m annually in recent years was the acquisition of a Hong Kong-based business.
Investment banks are expected to be hired for the transaction shortly.
Icon operates 30 cancer care centres across Australia delivering a mix of radiation therapy, chemotherapy and blood disorder treatment for patients.
It also operates through Asia and in New Zealand.
The country’s largest private hospital operator, Ramsay Healthcare, is considered a strong contender. Icon and Ramsay are understood to have already held talks.
There have been suggestions in the market that Ramsay’s shareholders have recently been more eager for it to make acquisitions in the Australian market rather than overseas because they view targets based on domestic soil as providing better investment prospects, with better synergies to its existing business.
Ramsay also has a competitive market in Australia where it has a major footprint and local knowledge.
The private hospital group is understood to be interested in expanding its pharmacy business and Icon is thought to be attractive because of its compound pharmacy business, selling drugs not available over the counter. It also fits the bill because it is a business of scale and Ramsay has always looked at big-ticket acquisitions that complement its existing network.
Greater scale in pharmacy for the country’s largest private hospital operator offers it end-to-end control of the healthcare network.
The plan at the time was to expand the business throughout Australia and Southeast Asia.
Ramsay in the past year has been looking at numerous targets, including Everlight Radiology.
It raised $1.4bn this year to create a war chest for the acceleration of its out-of-hospital growth strategy and become a fully integrated healthcare company.
Chief executive Craig McNally indicated the pandemic had laid bare the risks of relying on hospitals for earnings growth and showed the need to integrate more health services into Ramsay’s global portfolio.
Ramsay began branching out from hospitals last decade, moving into Australia’s $16bn pharmacy sector.
In the past year, it is known to have been considering Everlight Radiology, which is still on the market.
It has also looked at Britain’s largest mental health provider Priory, with 361 centres throughout the country.
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