Sale process begins for Bupa’s NZ aged-care operations

Some question the value of aged-care businesses in this time of high demand but low staff availability.

The sale process is understood to be now under way for Bupa’s New Zealand aged-care business, with indicative bids due in about five weeks.

British health insurer and healthcare provider Bupa is understood to have hired Macquarie Capital for a sale of its New Zealand aged-care business, and many suggest it is an odd time to sell out of aged care, given that challenges securing staff to work in nursing homes could suggest a slim pool of buyers.

But the business could be to the liking of New Zealand listed rivals.

While sources believe that Australian aged-care providers will take a look at the operation that comprises about 48 aged-care homes, New Zealand’s Oceania aged-care living and Metlifecare, which is owned by private equity firm EQT, are probably keen buyers.

Bupa New Zealand is estimated to be worth at least $NZ250m and the sale calls into question whether Bupa will also consider offloading its Australian aged-care operation where it owns about 63 nursing homes.

There has been speculation in the past that Bupa may stage a retreat from the Australian and New Zealand aged-care sector.

The thinking is that after having aspirations of overseas expansion, the UK-based Bupa now wants to keep its focus closer to home with global operations underperforming expectations.

Sources say Bupa’s New Zealand operation has attracted interest from a Japanese suitor, but it is unclear whether it is still circling the business.

The Australian mergers and acquisition space has been relatively subdued for aged-care groups in recent months due to uncertainty about how new regulations for the industry will work and where the staff will come from to meet the staffing requirements.

Reports from New Zealand say that the country is also facing staff shortages for aged-care facilities, has been hit by underfunding and does not have enough beds to meet demand.

According to IBISWorld, Bupa’s Australian and New Zealand healthcare arm generated $2bn of revenue in 2020 and $19.6m of net profit.

Its total assets were then worth $4.9bn.