Australia's biggest owner of day hospitals is on the hunt for acquisitions after securing the financial backing of the world's largest provider of products and services for patients undergoing dialysis.
Fresh from signing a takeover deal with Germany's $33 billion company Fresenius Medical Care, Cura Day Hospitals Group chief executive officer Peter Freeleagus said his company now had the access to capital and networks to fuel growth plans in Australia and offshore.
"We saw the benefits of partnering with Fresenius straightaway," Mr Freeleagus said.
"They are a very large leading healthcare group with a focus on clinical and operational excellence, as do we. And they have the financial resources and networks to back Cura's growth plans here and internationally."
As revealed by Street Talk on Friday, Fresenius has agreed to acquire a 70 per cent stake in Cura in a deal believed to value the local company at about $450 million including debt.
Cura was founded in 2008 and with 19 hospitals it has quickly become the largest day hospital owner in what is a fragmented but fast-growing industry. "The temptation was to do a rough old roll-up, but we wanted to do more than that," Mr Freeleagus said.
"We are very keen to attract new surgeons to the group and drive growth. We are looking very hard at organic brownfield investments. That is a big thing for us and we are looking to make some accretive acquisitions."
Mr Freeleagus will meet with the company's doctor shareholders next week, in an effort to secure their support for the transaction. The doctor shareholders, along with management and private equity firm Intermediate Capital Group, would own the remaining 30 per cent of Cura under the Fresenius deal.
"This is a great thing for our doctors," Mr Freeleagus said.
"Of all the groups that have ever wondered through our door, this one [Fresenius] was unanimous. We are absolutely delighted about it."
The company's hospitals treat about 100,000 patients a year, with the bulk of work coming from ophthalmic, gastro intestinal and plastic surgery consultation and procedures.
Germany-based 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.
"We want to support Cura's clinical leadership position in the market and we see huge opportunity to leverage combined scale," Mr Freeleagus said.
Growth options
Cura, whose biggest shareholder is private firm Intermediate Capital Group, hired advisory firm Rothschild about this time last year to consider its growth options.
Mr Freeleagus said the owners and a sub-committee of doctors considered a number of potential transactions and structures, including an initial public offering.
"I don't know that our doctors were dying to head to a listing and all the fun that comes with that," he said.
"We were not looking to list. I am not saying we would never do it...
"And from the doctors' perspective, they [now] get the best of both worlds – Fresenius is a healthcare specialist and a financial investor – it's a great fit."
"We believe the combination of our experienced management team and Fresenius coming on board represents an exciting opportunity," ICG's head of Australia Ryan Shelswell said.
"ICG will continue to be a significant investor in Cura and remains aligned to the future success of the company."
The transaction is subject to approval from Cura's doctor shareholders and is scheduled to complete in coming months.
Mr Freeleagus said it was an exciting time for day hospitals, with more doctors, funders and patients opting to use smaller sites for consultation and surgeries at the expense of medium sized hospitals.
