Ramsay Healthcare on the hunt for targets

Ramsay Healthcare is understood to be scanning the Australian and European market for acquisition targets at a time when its largest shareholder, the Paul Ramsay Foundation, has offloaded a $1.36bn parcel of shares in the country’s largest private hospital operator.

On its radar in Australia are said to be medical centres, which places private companies such as The Nexus Healthcare Group, worth about $300m, and Healius under the spotlight, along with the new medical centre venture of Henry Bateman.

One thought is that perhaps China’s Jangho will partner with Ramsay to buy Healius, of which Jangho is a major shareholder.

Jangho is known to be an eager buyer of Healius, despite expectations a takeover would not gain foreign investment approval from the federal government if it did a deal without an Australian partner.

It comes as market sources say the Paul Ramsay Foundation block trade out of Ramsay Healthcare may have been brewing for weeks.

The expectation is the mandated advisers, UBS and JPMorgan, moved promptly this week to sell down the interest after considering the plan for a while because of further market volatility expected with oil price gains on the back of attacks on Saudi Arabian facilities and a rallying US bond price potentially wreaking havoc on the market.

The shares are priced at the floor bookbuild price of $61.80, as revealed online by this column on Tuesday, and were at a discount of about 5 per cent on Monday’s close.

While the deal was underwritten at $61.80 a share by UBS and JPMorgan, which is thought to be one of Ramsay’s financiers, sources say it was covered by 7pm AEST on Monday night.

Buyers were understood to be institutions and investors holding stock over the long term, evidenced by the fact Ramsay’s shares closed on Tuesday slightly higher than the offer price and did not sell for a higher amount due to the sheer size of the deal.

Sovereign wealth funds and pension funds may have bought stock as they search for quasi-infrastructure opportunities.

But the trade of a 10.9 per cent interest was able to be executed after a recent decline in Ramsay’s share price that offered a good deal for buyers, still leaving the foundation with a stake of more than 20 per cent in Ramsay.

The company’s share price has been on the increase, trading higher from about $55 almost a year ago. It is understood the Paul Ramsay Foundation — advised by Adara — was eager to sell some of its shares in Ramsay to diversify its funds into other investments in a seller rather than buyer-led transaction.

The prediction now is the stock will trade sideways for some time, as was the case with other listed companies following major block trades in the past. Woodside Petroleum’s shares have failed to gain traction since Shell sold a $3.5bn block, while Caltex also traded sideways for a long time after Chevron staged a $4.8bn exit in 2015.

Shares in Ramsay closed at $65.20 on Monday, and on Tuesday night the shares closed at $62.20. The Paul Ramsay Foundation inherited a major interest in Ramsay Health Care following the death of its founder, Paul Ramsay, in 2014.