PEP, QIC run health check at Cura Day Hospitals; indicative bids land
The waiting room at Queensland-headquartered Cura Day Hospitals is thick with dealmakers from buyout firms and their comrades at core-plus infrastructure funds.
Cura Day Hospitals has seen its fair share of ownership changes in its 15-year-long life.
Street Talk can reveal at least four suitors lobbed non-binding indicative bids to sell-side adviser Citi by last Thursday’s deadline. The business makes $40 million a year at the earnings line and is slated to spell a $500 million-plus payday for owner, Germany’s Fresenius.
Parties that tabled first-round offers include Sydney private equity firm Pacific Equity Partners; QIC’s infrastructure investment arm; London-listed buyout giant Intermediate Capital Group (ICG); and Partners Infrastructure – each with form in the sector.
Pacific Equity Partners is sizing up Cura as a potential bolt-on acquisition or merger partner for its Healthe Care portfolio of hospitals and day surgeries, which it acquired for about $400 million from China’s Luye Medical Group in 2021. Of some note, managing director Shannon Wolfers is running point on the deal and will cut the cheque from PEP’s buyout fund – rather than the Secure Assets Funds.
Looming large among rival bidders is London-listed Intermediate Capital Group, which knows Cura well, having funded a management buyout from its erstwhile owner Archer Capital back in 2014. This time around, ICG has Sydney-based managing director James Giannas leading the charge; it has also tapped Rothschild’s bankers for advice.
The third suitor, Swiss private equity firm Partners Group is understood to have bid for Cura via its infrastructure unit, Partners Infrastructure. The firm has done its homework on the sector, having made an (unsuccessful) tilt for ASX-listed Healius in 2020. Sources said it was in talks with Barrenjoey Capital Partners around debt financing, but was otherwise self-advised.
Then there’s QIC, which oversees circa $30 billion in funds, and lays claim to owning Australia’s largest “short-stay” hospital platform, thanks to its 2019 acquisition of Nexus Day Hospitals from Clark Perkins’ PE firm Mercury Capital. In a bolt-on acquisition last year, QIC paid $138.6 million to buy Healius’s Montserrat Day Hospitals.
Fight Club (M&A style)
Cura owns day surgeries, eye surgeries and endoscopy units across the East Coast and in Perth, Tasmania and Adelaide. At least 20 parties took preliminary sale documents, attracted by its foothold in a highly fragmented industry and the lower operational costs incurred at day surgery businesses compared to hospital owners.
While it’s early days, the fact you’ve got traditional private equity firms like PEP going toe-to-to-toe with core-plus infrastructure funds which can pay more, would suggest the high double-digits sale multiple that Fresenius and Citi are seeking may be possible.
(Core-plus funds have the ability to bid lower discount rates than traditional PE, albeit on more conservative business plans even though the latter typically has greater operational experience and higher appetite for operational risk/business growth.)
Cura was founded in 2008 by doctors and management, with private equity investor Archer Capital as a shareholder.
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