Private equity owned I-MED Radiology Network is restocking its acquisition warchest as part of a new $1.01 billion debt deal in front of the group’s lenders.

Street Talk understands the new loan would see I-MED geared at a relatively conservative 3.8-times EBITDA, but leave room for the company to tap incremental debt facilities to go up to 5.25-times for sizeable M&A.

The firepower is sure to have bankers scouting opportunities for I-MED, which is already Australia’s biggest diagnostic imaging company with an estimated 15.2 per cent market share.

The company’s known to take an early look at most things of scale that head to market, although has left it to smaller players or new entrants to scrap over most deals. Industry consolidation is also one of the themes that attracted London-headquartered Permira to the business in 2018.

I-MED’s new loan would refinance Permira’s original $690 million loan (increased to $850 million) that funded its $1.25 billion radiology purchase three years ago.

It is understood 10 lenders in the syndicate have already pre-committed to up their exposure in the new debt package. The syndicate includes the major Australian banks.

Sources said the loan’s terms showed Australian and global banks were keen to write big cheques – and do their best to compete with unitranche deals and institutional term loans, which are pitched at credit funds and other institutional investors.

It’s also a sign that there’s also limited Australian dollar deals of size for banks, who are keen to increase their exposure to businesses that demonstrated resilience during last year’s market downturn.

The new debt deal is underwritten by Credit Agricole, HSBC, ING, Morgan Stanley, MUFG and Natixis.

The loan comes amid a spate of deals in diagnostic imaging in the region. Newcomer Infratil, and its manager Morrison & Co, have led the buying, snapping up Australia’s QScan and New Zealand’s Pacific Radiology in successive M&A deals. Infratil paid 13.3 times and 14.1 times EBITDA for the respective businesses.

Infratil’s keen buying – and enthusiasm from Permira and other private equity players – has helped bring a bunch of privately owned radiology groups to market, including NSW/Victoria group Imaging Associates.

Source: AFR

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