Morgan Stanley, Pacific Equity Partners, QIC, ICG, & Partners Infrastructure Bid $500m+ for Cura Day Hospitals

Australia’s biggest private hospital operator, Ramsay Health Care, has lobbed a first-round offer for Cura Day Hospitals, put up for sale by Citi in May, Street Talk can reveal.

Cura makes $40m a year at the earnings line and is slated to fetch a $500m-plus price tag for owner Frankfurt-listed healthcare giant Fresenius Medical Care.

Sources said Ramsay – which has a market value of almost $12bn and 74 hospitals and clinics around the country – submitted a non-binding indicative bid to sell-side adviser Citi earlier this month.

The healthcare giant is expected to be shortlisted through to the next stage of the auction which has attracted interest from private equity firms and core-plus infrastructure funds. Ramsay declined to comment on Monday.

Sources cautioned there was no certainty Ramsay’s indicative bid would progress to a binding offer, nor that a signed deal would materialise. Still, the company has deep pockets and is viewed as a heavyweight contender in the auction. Ramsay had cash on hand of $656.1m at the end of financial year 2023 and $558.7m in free cash flow.

But capacity to make acquisitions doesn’t equal investor support. Given Ramsay’s share price cash has crashed 39.75 per cent since a peak of $84.37 in late April 2022, miles away from KKR’s bid of $88 cash per share, shareholders may want management to focus on righting the ship. Ramsay has also commenced the sale of its Asia joint venture business Sime Darby Berhad and is gearing up for its AGM at the end of November.

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Shares hit a nine-year low of $48.42 on August 25 and were last trading around $50.85.

Cura owns day surgeries, eye surgeries and endoscopy units across the East Coast and in Perth, Tasmania and Adelaide. As this column reported, at least 20 parties took preliminary sale documents, attracted by its foothold in a fragmented industry and the lower operational costs incurred at day surgery businesses compared to hospital owners.

Should Ramsay make it to stage two, it would be facing off against a bevy of core-plus funds and buyout firms. Parties known to have tabled first-round offers include Morgan Stanley Infrastructure Partners; Sydney private equity firm Pacific Equity Partners; QIC’s infrastructure investment arm; London-listed buyout giant Intermediate Capital Group (ICG); and Partners Infrastructure.

Brookfield’s hospital company, Healthscope, is not involved in the auction, sources said.

Cura was founded in 2008 by doctors and management, with private equity investor Archer Capital as a shareholder.

Source: AFR

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