This article originally appeared in Citywire Australia.
2021 has seen a string of deals as private equity battles with infrastructure funds, and there’s likely more to come
Another day, another deal in the booming healthcare sector.
Today’s announcement that Centuria’s unlisted healthcare fund has sold two healthcare facilities to Real Asset Management for around $16 million is not huge news in itself, but is in the context for a frenetic few months for the health sector with a significant number of assets changing hands.
Many of the deals, such as Centuria’s sale of the facilities in Mildura and Secret Harbour in WA, have a real estate flavour but others, such as Blackstone’s purchase of clinical trial provider Nucleus last week are more around service delivery.
Either way, the healthcare sector is an investment hotspot and more deals are on the way in what is left of 2021 as private equity buyers cash out, and the next wave of investors move into acquisition mode.
Centuria, today’s seller, was a buyer in September with a $167 million deal to buy a portfolio of seven assets in the area of mental health real estate.
‘It’s a little like the home property market right now, everyone is desperate to get in and there’s a real fear of missing out,’ said one private equity manager, asking Citywire for anonymity.
‘Funds are cashed up and there’s a rush to beat the infrastructure funds, who are getting pretty aggressive in this sector.’
Private equity has been to the fore in the recent action, with Pacific Equity partners spending $400 million on a portfolio of Health Care private hospitals and day centres from China’s Luye, and joining Crescent Capital in a deal across the Tasman for Tamaki Health.
PEP is also a seller, and has the likes of Singapore’s Keppel Corporation and Morrison and Co. reportedly lining up to buy NZ private hospital company Evolution Healthcare.
Last month, global private equity investor the Riverside Company reportedly acquired Victorian occupational rehab company Nabenet, with plans to combine it with another acquisition, NSW-based Altius Group and double its footprint.
Another busy local private equity player has been Alceon, which has been pursuing a roll up of short stay hospitals and ophthalmology clinics, while one of the REIT deals of the year saw Home Consortium ditch plans for $1bn unlisted healthcare trust and insert its healthcare assets into the newly listed HealthCo REIT.
Added to the list are plans by Canada’s NorthWest Healthcare Properties REIT for a $600 million healthcare precinct in Geelong in partnership with Epworth Hospitals, coming after the June bid to buy Australian Unity Healthcare Property Trust for $2.1bn was rejected.
In that offer, NorthWest sweetened its price up to $2.8bn but this was rebuffed.
Then there was the the $92 million sale of a specialist cancer centre in Adelaide NZ group Vital Healthcare Property Trust.
There are likely to be more deals in the pipeline before 2021 runs its course. In addition to Evolution, there is talk about I-MED Radiology, the Vision Eye Institute and Archer Capital’s Allity.
All proof that the feeding frenzy in the healthcare sector has some distance left to run.