QIC acquires New Zealand’s Evolution Healthcare

The firm’s head of global infrastructure Ross Israel said the resilience of previous QGIF acquisition Nexus Hospitals through the pandemic sparked the firm’s decision to acquire the New Zealand corporate hospital platform.

Brisbane-based asset manager QIC is partnering with Sunsuper to acquire New Zealand private hospital platform Evolution Healthcare via its Global Infrastructure Fund.

The platform, which is the second largest of its type in New Zealand, consists of 10 comprehensive and day hospitals, a portfolio of ancillary healthcare facilities and a private hospital in Australia.

Infrastructure Investor understands the size of the deal is roughly A$700 million ($500.8 million; €443.7 million). QIC declined to comment on the size of the transaction.

QIC’s head of global infrastructure Ross Israel told Infrastructure Investor the firm had been seeking a day surgery platform to add to its QGIF portfolio following the strong performance of Nexus Hospitals, Australia’s second largest day hospital platform, through the covid-19 pandemic. QGIF acquired Nexus Hospitals in 2019.

The fund, which initially reached its A$2.38 billion hard-cap in 2017, recently reached a further A$1 billion hard-cap for an additional capital raise.

“We previously made an investment into Nexus Hospitals in Australia, which is a similar day surgery platform, and as we progressed through [the covid-19 pandemic] found it to be a resilient and diversifying asset for our global infrastructure fund,” Israel said.

“As we look back through the covid-19 experience, [Nexus Hospitals] added diversification and presented itself as an attractive growth platform. It gave us insight that adding a business like Evolution in New Zealand would be further diversifying for QGIF as it looked to deploy the remainder of the A$1 billion extension capital raise we closed in October this year.”

Israel also highlighted Evolution Healthcare’s decentralised network of hospitals and healthcare facilities – most of which are located outside New Zealand’s largest city, Auckland – as one of the key attractions of the business.

“When you buy such a portfolio, we are looking where there is diversification. [In New Zealand], the largest market, disproportionately, is Auckland. Diversification through Evolution’s incumbent positions in key catchments across the country meant on the downside we saw positive resilience when we stress tested the asset,” Israel said.

“It’s also got an interesting, diverse funding profile when compared to similar assets in Australia. Private hospitals in Australia are typically [approximately] 90 percent funded by private health insurance whereas in New Zealand its drawn 35 percent from government entities, 55 percent from private health insurance and 10 percent from individuals.”

According to Israel, well over half of QGIF’s additional capital raise has been deployed to date. In addition to the purchase of Evolution Healthcare, the fund’s recent investments include the acquisition of Tilt Renewables; a further investment in US distributed infrastructure platform Generate Capital, where QIC is a lead investor; and the purchase of US energy platform CenTrio.