With cash in hand, Ramsay Health Care is in acquisition mode

Ramsay Health Care is understood to have added three mental healthcare assets in France to its shopping list as the country’s largest private hospital operator remains in acquisition mode.

The hospitals are owned by psychiatric health provider Inicea and are believed to be worth up to €350m ($571.5m).

It comes as the sales process for the Priory Group healthcare business in Britain gets underway, which is also said to be on Ramsay’s radar.

Priory is Britain’s largest mental health provider with 361 centres across the country, but it is known for its flagship Roehampton Hospital in London, where rich and famous patients, such as Amy Winehouse, Kate Moss, Johnny Depp, Robbie Williams and Paula Yates, receive treatment at its addiction clinic.

After a major capital raising in April, where it secured $1.4bn from investors, Ramsay now has about $2bn worth of firepower for acquisitions.

Other groups under its acquisition spotlight include Australia’s Icon Care and Everlight Radiology, along with Qscan Group, owned by Quadrant Private Equity.

However, Britain and Europe are areas where Ramsay is said to be keen to expand into.

Such markets offer the best avenues for growth, with the number of people taking out private health insurance in Australia on the decline for some time, putting pressure on profit margins for private hospital providers.

The services provided by Priory and Inicea sit nicely within Ramsay’s area of expertise, with the Australian private hospital provider, founded by Paul Ramsay, starting out as a business offering mental health services.

Mental health services are expected to be in strong demand in the aftermath of the COVID-19 pandemic.

Ramsay in the past year has put in a bid for the Priory business, with British reports suggesting it was backed by European private equity firm CapVest.

Priory is owned by Acadia and is said to be worth about $2.2bn. The sales process was earlier suspended as the COVID-19 pandemic took hold.

But the concern about Priory for Ramsay is that it employs a large number of specialists, which are costly, and the operation would likely come under heavy bidding at auction, which may place it out of Ramsay’s reach.

Priory has attracted interest from private equity firms such as Kohlberg Kravis Roberts and Brookfield, as well as Carlyle, but strategic buyers such as Ramsay typically have a price advantage over buyout funds.

Acadia Healthcare bought the business in 2016 from Advent International for more than £1.2bn and merged it with Partnerships In Care.

A sales process was launched last year through advisory firm Rothschild in response to inbound interest.