TPG, Carlyle in A$2.6bn Healthscope IPO

The US firms stand to double the money they paid for Australia’s second-largest private hospital company in 2010.

TPG and The Carlyle Group are planning to exit Healthscope, an Australian private hospital operator, in an initial public offering that could raise up to A$2.57 billion (€1.77 billion; $2.40 billion).

Healthscope, which was first listed on the Australian Stock Exchange in 1994, was acquired by a consortium led by TPG and Carlyle in 2010 after both buyout firms beat rival offers from US-based Kohlberg Kravis Roberts and trade player Tenet Healthcare.

The vendors, which will keep a combined stake of between 25 percent and 40 percent after the sale, stand to near double their initial A$1.99 billion investment in Healthscope. The Melbourne-based company will have a market capitalisation of up to A$3.81 billion – giving it an enterprise value of up to A$4.7 billion – if its current owners sell the maximum number of shares for their top asking price.

Founded in 1985, Healthscope runs 44 hospitals in Australia as well as pathology centres in New Zealand, Singapore and Malaysia. It reported revenues of A$1.2 billion and a net profit of A$20.7 million in the six months to February – a jump on the A$109.4 million loss it posted in the same period a year earlier, according to the company’s last half year results.

Its vendors have already secured about $1.7 billion from cornerstone investors, Healthscope managing director Robert Cooke was quoted as saying after a telephone briefing earlier this week. He declined to name who the buyers were but said these had already committed to pay at the top end of the asking range.

Healthscope is being marketed at 20 to 23 times forecast 2015 earnings. The IPO stands to be Australia’s largest since the A$3.99 billion float of rail operator QR National, now Aurizon Holdings, in November 2010.