KKR’s statement out of the US this week about its commitment to real estate has some thinking it may hold on to Ramsay Health Care’s properties after all.
The New York-based buyout fund has offered $20bn for Australia’s largest private hospital operator and is carrying out due diligence on the business.
While it’s a no-brainer for private equity firms to sell off the real estate of a business after making the acquisition to maximise profits, some are wondering whether this will in fact be how it pans out with Ramsay should it buy the healthcare provider.
An alternative view is that it holds the real estate and places the 54 hospitals that Ramsay owns into a separate KKR real estate fund where international investors inject in capital.
Should it pan out this way, it may prove a disappointment to groups like Charter Hall, which is keen to buy the properties with AustralianSuper or Canada’s NorthWest Healthcare Properties.
KKR said demand for infrastructure and property investments remains high as investors seek refuge from inflation, rising interest rates and disruptions in public securities markets, The Wall Street Journal reported.
For the first quarter, the value of KKR’s real-assets funds – which include infrastructure and property – rose, which helped offset write-downs of its private-equity and credit holdings.
KKR reported a net loss of $US73.8m in the first quarter, after reaping a profit of $US1.64bn a year earlier.
Revenue fell 78 per cent to about $US1bn from $US4.56bn in the first quarter of last year.
Nonetheless, the firm reported strong fundraising for the quarter and a jump in the fees it collects on assets it manages. After-tax distributable earnings climbed 47 per cent to $US1bn.
Scott Nuttall, KKR’s co-chief executive, said the firm aimed to take advantage of the current market volatility.
The value of KKR’s private equity holdings declined 5 per cent during the quarter, and the asset management business reported a quarterly loss of $US165.2m.
Despite the recent market volatility, KKR raised $US26bn during the quarter with final closes for its latest North American private equity and global infrastructure funds.
The firm’s assets under management – $US479bn, up 30 per cent from a year ago – helped increase the fees it collected by 66 per cent to $US605m.
With The Wall Street Journal
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