If the KKR & Co-led consortium is successful in its $20 billion tilt, it will be the end of the 25-year run for Ramsay as an ASX listed company.
HESTA chiefthis week said the investment would be good for patient care and financial returns for its healthcare-dominated member base.
Bookmyer and Lang knew that without getting the Paul Ramsay Foundation, a key shareholder, comfortable with its proposed structure and partners, no deal would get over the line.They proposed to PRF around September the possibility of rolling part of its 18.8 per cent stake ino a new venture, allowing it to keep ties with the company founded by Paul Ramsay in 1964.
Ramsay’s strategic hospital market position in Australia cannot be replicated – it was built up over nearly 60 years – and Deakin-Bell says other private equity or patient asset managers may also bid for the company.Healthcare is an increasingly attractive sector, underpinned by a growing ageing population and more chronic health issues like diabetes. The interest has been magnified in a post-pandemic world where there is a bigger role for private players in a stretched public system.
A key question for investors is whether KKR or another firm can afford to pay a higher price for these assets. Private equity firms typically target a 20 per cent internal rate of return each year over a five-year holding period.There are question marks over the low-returning French business, Ramsay Sante, in which Ramsay has a 52.79 per cent stake.
ASX-listed fund manager Charter Hall is keen to extend its funds management arm further into social infrastructure, while its listed peer, Dexus, has accumulated $1.4 billion in healthcare real estate. The KKR-led consortium lobbed its non-binding indicative offer of $88 cash per share at the end of January. Including the more than $800 million in franking credits, this boosts the KKR consortium’s bid to $91.60.
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