Healthcare / Aged Care

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Blackstone invests in retirement village developer NLV
PRASHANT MEHRA BUSINESS SPECTATOR NOVEMBER 25, 2014 10:52AM

PRIVATE equity giant Blackstone is investing $150 million in Western Australia-based retirement park developer National Lifestyle Villages (NLV).

The investment will be through Blackstone’s tactical opportunities group, but details of how much of a stake it would take were not available.

NLV currently operates nine retirement villages in Western Australia, and one in Victoria, and has another six properties under various stages of planning, with the developments aimed at early retirees and persons older than 45 years.

The NLV partnership represents an attractive and long-term opportunity to invest in a well-respected and successful Australian company, said Kishore Moorjani, head of Blackstones’s tactical opportunities group in Asia.

Investors have shown a strong appetite for Australian health care and aged care-related businesses ​in recent months, ​as these are seen to directly benefit by providing services to ​the country’s​ ageing population.

Aged care companies Regis Healthcare, Japara and Ingenia Communities are among the sector companies that have sold shares to the public or listed on the ASX in recent months.

Aged care operator Estia last week said it had already locked in $625m from cornerstone investors ahead of its upcoming IPO. ​

Business Spectator

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Aged care provider Estia falls 13pc on ASX debut
THE AUSTRALIAN DECEMBER 06, 2014 12:00AM

Andrew Main

Wealth Editor
Sydney

THE fragility of current bullish pricing in the aged-care sector was shown up yesterday when Estia Health began trading at $4.98 a share, 77c or more than 13 per cent below the $5.75 subscription price.

Simon Cox of UBS, one of the few senior investment bankers involved in the float who was brave enough to front the listing ceremony at the ASX, described the debut as disappointing, but noted that it had been overshadowed by last week’s Medibank Private debut.

Estia is now capitalised at $857 million, but its poor float performance is expected to put a dampener on future IPO proposals in the sector.

The shares closed the day just off their lows at $4.74, a discount of $1.01 or a startling 17.5 per cent on the price investors paid for 126 million shares to cut the 57 per cent stake previously owned by private equity group Quadrant back to 16 per cent. Much of the money raised was used to pay off debt created by assembling one of the biggest aged care operations in Australia, via a big buying spree in recent months.

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MOREEstia Health’s sickly start
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Vendors raised $725m by the exit, although Quadrant and the founders are retaining 53.9 million or 29.99 per cent of the 180 million shares on issue. Quadrant’s continued 30.8 million share holding means it is still the biggest single shareholder.

Estia is based in Camberwell in Melbourne. It owns or manages 39 facilities and 3203 operating aged cased places across Victoria, South Australia, NSW and Queensland, and has contracted to buy another 410 places at five facilities.

The stock was formally launched by founder and director Peter Arvanitis, who rang the bell at the ASX in Sydney and retains a 6 per cent stake.

Estia’s chief executive is Paul Gregerson, who said he was more focused on the long-term outlook for the aged care industry than the immediate share price.

“Most of the people we help are aged around 85 and the number of people reaching that age in Australia is forecast to double by 2030. We’re in for a tsunami of octogenarians,’’ he said.

Critics of the float say that its timing was clearly designed to cash in on the recent successful floats of aged care operators Japara and Regis. “It’s the hottest space around but Estia was perceived as perhaps the least attractive of the three,” said one.

According to the Estia prospectus, the issue price of $5.75 was 21 times 2015 net profit, so the price drop has pulled the prospective P/E back to 17.3 times.

Estia Health locks in $625m from cornerstone investors ahead of IPO
MAGGIE LU YUEYANG BUSINESS SPECTATOR NOVEMBER 21, 2014 5:02PM

THE $1 billion Estia Health has locked in $625 million from cornerstone investors for the aged care provider’s planned IPO, ahead of next week’s official opening of the offer.

Shares were offered at $5.75, or a multiple of 21-times forecast net profit, giving the company a market value of $1.035 billion.

The commitment from cornerstone investors has already exceeded the minimum offer size, flagged in Estia’s prospectus earlier this week, indicating strong demand for the aged care provider.

Estia has said in the prospectus it plans to sell 75.9 million to 146.8 million shares in the IPO, at an indicative price range of $5.17 to $6.96 each. It aims to raise between $528 million to $834m.

Private equity owner Quadrant is believed to be selling 38 per cent of its stake, and will hold about 17 per cent in the company after the float.

The proceeds of the offer will be used to repay Estia’s existing debt, as well as to fund further growth opportunities, the company said.

The aged care provider is well positioned to make more acquisitions after the IPO, taking the opportunity to grow as the number of players in the sector further contracts, Data Room reported earlier.

The stock is expected to start trading on December 5.

Deutsche Bank, UBS, and Morgan Stanley are the joint lead managers on the IPO.

Business Spectator

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Aged care industry on 'brink of a new era'

Joanna Mather
623 words
5 Dec 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

The Abbott government has hinted it could remove limits on the number of nursing home beds, which would significantly boost the profit potential of three sharemarket debutantes in the $13 billion aged care sector.

Assistant Minister for Social Services Mitch Fifield on Thursday said 11,196 new aged care beds had been approved worth $660.5 million. The government regulates residential aged care bed supply through a licensing system similar to taxi licenses.

Demand in the latest round spiked to levels not seen since 2007.

Much of the demand was driven by large private aged care businesses and newly listed companies.

Removing the limit would be a boon for Japara Healthcare, which listed on the ASX six months ago, and Regis Healthcare, which floated in October.

A third provider, ­Quadrant Private Equity-backed Estia Health, is preparing for a $1 billion-plus float on Friday.

"The aged care sector is now being compared to where the private hospital sector was 20 years ago," Senator Fifield told The Australian Financial Review.

"It is on the brink of a new era, filled with possibilities and new business challenges."

The federal government funds aged care in two main ways: beds in residential facilities and support for people still living at home.

A total of 17,5000 new places were allocated across those two areas in the latest round. Along with 11,196 ­residential beds there were 6653 home care places.

In line with the trend for people wanting to remain in their homes longer, the government has promised to increase the number of home care places nationally from around 66,000 to 100,000 by 2017.Demand to rise

Demand for residential places is forecast to rise significantly.

According to Aged and Community Services Australia, the nation will need 82,000 new aged care beds by 2020. That would mean opening two new 100-bed residential aged care facilities every week over the next seven years.

Mr Fifield left the door open to a fundamental shift away from a centralised licensing system to the removal of caps on how many beds the Commonwealth supports.

"The holy grail for aged care providers is having an uncapping of aged care places. It's hard to have a truly consumer-driven sector in the absence of that."

Yet this would have to occur within the funding envelope, Mr Fifield said.

"This will always be a mixed environment where there will be personal dollars contributed and taxpayer dollars contributed," he said.

The Coalition adopted Labor's Living Longer, Living Better aged care policy when it came to government.

The policy includes a push towards consumer-directed care. This involves consumers being able to "spend" their allowance on the services of their choice. In-home care packages will be the first to be given this treatment from July 1 of next year.Time to talk For Mr Fifeld, the endgame is a voucher-style system across aged and disability care where funding follows individuals.

A legislated review of the current aged care changes, examining whether "further steps could be taken to change key aged care services from a supply driven model to a consumer demand driven model", must occur by 2017.

"At this stage we have the system that we have but what I want to do is start the discussion in the sector about where to next," Mr Fifield said.

"It might not be that we can get to the aged care nirvana in one step. It may take a few steps but we don't have to wait for the legislated 2017 review to start thinking and talking about where we ultimately would like to get to."


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