Mid-tier private equity firm Quadrant is poised to acquire aged-care operator Estia Health for about $175 million in a deal that will mark the sixth investment from its latest fund, which had $750 million to deploy.
Quadrant, which reopened the initial public offering market in June with the listing of its fertility business, Virtus Health, is expected to close the transaction before the end of the week.
It also means the private equity firm has just one investment left to make out of its third fund before it starts raising another $750 million for Fund IV in March next year.
Estia has 10 facilities in Victoria with over 1100 beds and is regarded as one of the best-performing operators for clinical results.
It's understood Quadrant has plans for further brownfields expansion through the acquisition of other aged-care companies which will operate under the Estia brand.
The Quadrant team, led by Chris Hadley, Marcus Darville and George Penklis, aims to cash in on an expected spike in demand from the baby boomer generation for quality aged care.
The industry has also become more attractive for investors following the Productivity Commission report and subsequent changes to regulation.
Private equity firm Archer Capital agreed to buy Lend Lease's aged-care business for $270 million in March, representing a multiple of 8.5 times earnings. More recently, Asian tycoon Goh Geok Khim picked up a stake in top-three Australian residential aged-care services player Domain Principal Group.
Virtus has seen its share price soar by over 40 per cent since being listed by Quadrant in June, opening the window for a raft of public float hopefuls.
Quadrant also owns a 37 per cent stake in New Zealand's second-largest retirement village group, Summerset, which dual-listed on the Australian Securities Exchange in response to increased interest from Australian investors.
(First published in The Australian Financial Review, Oct 1st 2013)
Writen by Global Administrator, 14/03/2016 News