German medical equipment and services giant Fresenius is set to take a 70 per cent stake in Australia's largest day hospital group, private equity-backed Cura Day Hospitals Group.
Street Talk can reveal the $33 billion company's subsidiary Fresenius Medical Care has signed a deal to invest in the business alongside Cura Day Hospitals doctors and management and existing private equity owner Intermediate Capital Group.
Sources said Cura Day Hospitals chief executive Peter Freeleagus was preparing to brief the company's doctors and other stakeholders in a roadshow series beginning next week.
It is understood the deal values Cura Day Hospitals at $400 million to $450 million on an enterprise value basis, and is subject to approval from the company's doctor shareholders.
Cura Day Hospitals owns 19 day hospitals across the country, which makes it the largest player in what is a highly fragmented industry.
It makes about half of its revenue from ophthalmic-related admissions and its hospitals include Adelaide Day Surgery, Queensland Eye Hospital, Kawana Private Hospital and the recently acquired Liverpool Eye Surgery.
Fresenius has a similar sized Australian business, with 18 clinics across the country specialising in dialysis as a result of chronic kidney failure. Its 20-year old Australian arm is just a small part of its global footprint, with operations in 120 countries and more than 3000 dialysis clinics.
No doubt Cura's pitch to its doctors will be about using Fresenius' financial resources and networks to help with its own growth plans both in Australia and internationally.
And there is also the sale price.
Each doctor is expected to vend about half of their shares into the offer and retain the rest as co-investors alongside the German company.
Cura's 100-odd doctors should be pretty adept at such moves. In the company's nine-year life, it has been co-owned by private equity firms Archer Capital and Intermediate Capital Group, and is now set for its third major backer.
It will be interesting to see whether Fresenius takes up the option to acquire the remaining 30 per cent - or at least ICG's minority stake - in coming years.
It's understood Fresenius beat a handful of other suitors to take. Rothschild advised the vendor, having been brought in about this time last year to assess inbound inquiries as first reported by Street Talk.
Elsewhere in health, private equity bidders are gearing up for Valeant-owned iNova Pharmaceuticals' auction ahead of binding bids later this month.
It is understood auctioneer Goldman Sachs is waiting for Valeant to issue audited accounts next week before releasing a final bid date.
Street Talk can reveal Blackstone Group has Morgan Stanley in its corner to assist with its offer. Blackstone will take on private equity rivals including The Carlyle Group and Pacific Equity Partners.
