* Sale would be Australia's third-biggest IPO ever -data
* IPO prospectus possible as early as end-June -source
* Listing planned at P/E multiple of 23 to 25 -source
(Recasts, adds context on healthcare sector and IPO market)
By Stephen Aldred
HONG KONG, June 20 Buyout firms TPG Capital and
Carlyle Group are targeting a $2.4 billion initial public
offering of shares in Australia's Healthscope Ltd as their
most-favoured option for the country's second-biggest private
hospitals operator, a source with direct knowledge of plans told
Amid a banner year for Australian IPOs, stoked by Sydney's
buoyant stock market, a listing of that size would be the
country's third-largest ever, according to Thomson Reuters data.
It would also underline the growing appeal of the sector a
country where healthcare spending is growing over 8 percent
annually, according to Healthscope.
The firm's two 50-50 owners, who bought Healthscope in 2010
for A$1.99 billion ($1.73 billion at the time), are on a
roadshow in Asia, the person said, lining up institutions who
will commit to buy shares in the IPO known as 'cornerstone'
investors. Attaching cornerstone investors, designed to
encourage others to also put their money in, is unusual for an
Australian listing, but common in Asia.
If successful, an IPO prospectus for Healthscope, which owns
44 private hospitals in Australia, would be filed by end-June or
early July, said the person. The source could not be named as
discussions on the listing are private.
TPG and Carlyle have explored three options as they looked
to cash in on strong demand for quality healthcare assets,
according to the source: a listing, a sale to a trade buyer, or
a spin-off of property assets via a trust.
With Sydney's benchmark index up 14 percent over the last 12
months, and Australia's IPO market booming, Healthscope's owners
now favour a listing, the source said. Proceeds from IPOs are
$4.2 billion so far this year, while for the comparable period
in each of the previous six years, a combined $3.6 billion was
raised, according to Thomson Reuters data.
A final decision to formally trigger the share sale process
has yet to be made, the person said.
An external spokeswoman representing all three firms - TPG,
Carlyle and Healthscope - declined to comment.
At $2.4 billion, a listing for Healthscope would become the
largest in Australia since rail freight company QR National Ltd,
now known as Aurizon Holdings Ltd, raised $4.4 billion
in November 2010, according to Thomson Reuters data.
After a cautious start to 2014 - in March, three IPOs were
scrapped in as many weeks - listings performed better toward the
middle of the year. The biggest listing since QR National,
laundry and catering company Spotless Group Ltd, closed
on Friday at a 7.8 percent premium to its issue price after
listing a month ago.
In perhaps the strongest sign of growing demand in the
Australian IPO market, hotel operator Mantra Group Ltd
debuted at a moderate premium to its issue price on Friday,
trading at A$1.815 compared to its A$1.80 issue price. Mantra
was one of the three listings cancelled in March when investors
balked at paying A$1.80 for the stock.
Healthscope has an equity value of about A$4 billion and
including debt, it will have a valuation of between A$4.5
billion and A$5 billion, the person said. It reported A$177.1
million in earnings before interest, taxes, depreciation and
amortisation for the six months ended December 2013, up 4.4
percent from a year earlier.
The listing is currently planned at a price to forward
earnings multiple of 23 to 25 times, said the source. Listed
peer Ramsay Health Care Ltd trades at a forward P/E
multiple of 24.09, while the median for the sector is 19.59,
according to Thomson Reuters data.
The number of Australians with private health insurance -
the biggest driver of private hospital revenue - has risen from
9.8 million to 11 million since 2009 - just under half the
country's population - as the state operates a policy of paying
a 30 percent rebate on private health insurance premiums.
"The pressure on government supplies of healthcare is still
high," Morningstar analyst Chris Kallos said. "Given the waiting
times in public hospitals, I doubt we'll see any change to the
dynamics affecting private hospitals. It's in the government's
interests to keep people like Ramsay (and Healthscope) viable
because it takes the pressure off."
($1 = 1.0639 Australian Dollars)
(Additional reporting by Byron Kaye in SYDNEY; Editing by Denny
Thomas and Kenneth Maxwell)