(Adds detail, executive comment)
By Freya Berry
LONDON, June 25 UK private hospital group Spire
is to list its shares on the London Stock Exchange,
seeking to raise 315 million pounds ($534.6 million) to cut debt
and finance its expansion plans.
Spire is likely to be one of the last companies to seek a
flotation before the traditionally quiet summer period. Proceeds
from UK listings have more than tripled this year as companies
rush to capitalise on firm stock markets and private equity
funds seek to cash in on their investments.
The company, owned by private equity firm Cinven,
will be valued at around 1 billion pounds, excluding debt, in
the sale of new and existing shares, two sources familiar with
the matter said on Wednesday.
Cinven created Spire through its 2007 purchase of the
hospital business of private healthcare group Bupa for an
enterprise value (including debt) of 1.4 billion pounds, since
when Cinven has not taken money out of the company. The private
equity firm has not given the equity value of Spire at the time
of its investment.
Spire Chief Executive Rob Roger said on a telephone call
with journalists that Cinven would retain a substantial stake in
the business. He said Spire was planning two new regional
hospitals by 2017 and another two in London further in the
future, as well as four more radiotherapy centres.
Spire, which runs Britain's second-largest chain of private
hospitals, generated core earnings (EBITDA) of 154.1 million
pounds in 2013 after rental costs. The firm will have debt of
just under 500 million pounds after its listing.
The chain refinanced its loan facilities in 2013 with a sale
and leaseback of 12 of its 39 hospitals, raising around 700
Over half of Spire's revenue comes from private medical
insurance. That market contracted by almost 8 percent during the
recession and has since begun a slow recovery, but still covered
only 10.8 percent of the UK population at the beginning of 2013
- its lowest penetration in over 20 years, according to
healthcare data provider Laing and Buisson.
Spire, which will be the only private hospital operator
listed on the London Stock Exchange, is targeting an
increasingly cash-strapped public health service. Roger said the
UK private hospital market was worth 4.6 billion pounds last
Private hospital operators have recently fallen under the
scrutiny of the Competition Commission, Britain's anti-trust
watchdog. Spire was cleared of anti-competitive behavior but
rivals HCA and BMI were ordered this year to sell nine hospitals
amid concerns over lack of competition and inflated pricing.
The company aims to achieve a "free float" of readily
tradeable shares of at least 25 percent of its equity.
JP Morgan, Bank of America Merrill Lynch and
Morgan Stanley are joint global coordinators. JP Morgan
and Morgan Stanley are also acting as joint sponsors. Numis
is co-lead manager.
($1 = 0.5892 British Pounds)
(Editing by Jane Merriman and David Holmes)