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 Amid a banner year for Australian IPOs, stoked by Sydney's buoyant
stock market, a listing of that size would be the country's
third-largest ever, according to Thomson Reuters data. It would also
underline the growing appeal of the sector a country where
healthcare spending is growing over 8 percent annually, according to
Healthscope.
The firm's two 50-50 owners, who bought Healthscope in 2010 for
A$1.99 billion ($1.73 billion at the time), are on a roadshow in
Asia, the person said, lining up institutions who will commit to buy
shares in the IPO known as 'cornerstone' investors. Attaching
cornerstone investors, designed to encourage others to also put
their money in, is unusual for an Australian listing, but common in
Asia.
If successful, an IPO prospectus for Healthscope, which owns 44
private hospitals in Australia, would be filed by end-June or early
July, said the person. The source could not be named as discussions
on the listing are private.
TPG and Carlyle have explored three options as they looked to cash
in on strong demand for quality healthcare assets, according to the
source: a listing, a sale to a trade buyer, or a spin-off of
property assets via a trust.
With Sydney's benchmark index up 14 percent over the last 12 months,
and Australia's IPO market booming, Healthscope's owners now favor a
listing, the source said. Proceeds from IPOs are $4.2 billion so far
this year, while for the comparable period in each of the previous
six years, a combined $3.6 billion was raised, according to Thomson
Reuters data.
A final decision to formally trigger the share sale process has yet
to be made, the person said. An external spokeswoman representing
all three firms - TPG, Carlyle and Healthscope - declined to
comment.
CAUTION ABANDONED
At $2.4 billion, a listing for Healthscope would become the
largest in Australia since rail freight company QR National Ltd, now
known as Aurizon Holdings Ltd, raised $4.4 billion in November 2010,
according to Thomson Reuters data.
After a cautious start to 2014 – in March, three IPOs were scrapped
in as many weeks – listings performed better toward the middle of
the year. The biggest listing since QR National, laundry and
catering company Spotless Group Ltd, closed on Friday at a 7.8
percent premium to its issue price after listing a month ago.
In perhaps the strongest sign of growing demand in the Australian
IPO market, hotel operator Mantra Group Ltd debuted at a moderate
premium to its issue price on Friday, trading at A$1.815 compared to
its A$1.80 issue price. Mantra was one of the three listings
canceled in March when investors balked at paying A$1.80 for the
stock.
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Healthscope has an equity value of about A$4 billion and including
debt, it will have a valuation of between A$4.5 billion and A$5
billion, the person said. It reported A$177.1 million in earnings
before interest, taxes, depreciation and amortization for the six
months ended December 2013, up 4.4 percent from a year earlier.
The listing is currently planned at a price to forward earnings
multiple of 23 to 25 times, said the source. Listed peer Ramsay
Health Care Ltd trades at a forward P/E multiple of 24.09, while the
median for the sector is 19.59, according to Thomson Reuters data.
The number of Australians with private health insurance - the
biggest driver of private hospital revenue - has risen from 9.8
million to 11 million since 2009 - just under half the country's
population - as the state operates a policy of paying a 30 percent
rebate on private health insurance premiums.
"The pressure on government supplies of healthcare is still high,"
Morningstar analyst Chris Kallos said. "Given the waiting times in
public hospitals, I doubt we'll see any change to the dynamics
affecting private hospitals. It's in the government's interests to
keep people like Ramsay (and Healthscope) viable because it takes
the pressure off." ($1 = 1.0639 Australian Dollars)
(Additional reporting by Byron Kaye in SYDNEY; Editing by Denny
Thomas and Kenneth Maxwell)
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