The Healius Lumus Imaging sale process is shaping up as a two party battle, with TPG Capital and Pacific Equity Partners believed to be the last contenders in the contest.
“Final” bids for the unit were received last Thursday, but the understanding is that additional due diligence will conducted and then binding bids will be received.
IFM, which was considered the frontrunner in the competition, is out, largely because a turnaround approach is required.
Such situations typically have less appeal to infrastructure investors like IFM, looking for a steady earnings stream. They’re more suited to a private equity firm or a strategic group.
Affinity Equity Partners has also left the contest.
TPG Capital’s bid is being spearheaded by the Australian country head for the US-based private equity firm, Vincent Wong, who is based in Melbourne.
PEP, as earlier reported by DataRoom, is working with Stanton Road Partners and Bank of America.
Its interest at the start of the auction was considered lukewarm at best, so it will be interesting to see how it progresses through the final stages. No doubt it would snap up Healius at the right price, but it’s understood that the Australian listed healthcare provider is seeking about $700m net, or after transaction and tax costs, with the gross asking price well over that amount.
While the potential upside for any buyer could be substantial, it may be tough going in the early stage, with some saying a business clean up is needed.
Lumus Imaging, advised by UBS, is the nation’s third-largest diagnostic imaging operation behind Sonic and Permira’s I-MED.
Its earnings before interest, tax, depreciation and amortisation over the next year are forecast to be $60m-$70m.
Diagnostic imaging is attractive to private equity, with artificial intelligence expected to create upside.
Healius is selling its Lumus Imaging unit to drive down its debt and fund its pathology arm, despite the imaging operation being the stronger performer.
It last year raised $187m through Barrenjoey and has since refinanced.
Before delivering its full-year result on August 21, Healius issued a profit downgrade after improving pathology volumes for the half year were offset by lower-than-expected fees due to the softer GP market and general inflation pressures.
Healius now expects underlying EBITDA for the 2024 fiscal year to be between $345m and $350m, and underlying EBIT to be between $60m and $65m.
Goldman Sachs well placed with Real Pet Food sale imminent
Investment bankers have recently entered a beauty parade in the hope of landing the job of selling the pet food company.
KKR weighing up $8bn office landlord Dexus
Blackstone made another bid for the real estate and infrastructure group last year, and now its major private equity rival is said to have been looking.