Reuters logo
Exclusive: Cinven hires banks for possible $2.5 billion Spire sale
March 6, 2014 / 3:15 PM / 4 years ago

Exclusive: Cinven hires banks for possible $2.5 billion Spire sale

LONDON/FRANKFURT (Reuters) - Buyout firm Cinven has hired banks to sell the UK’s second-biggest private hospital operator Spire in a possible 1.5 billion pound ($2.51 billion) deal, and expects strong demand as funds compete for rare investment opportunities in the sector, several people familiar with the matter said.

Cinven CINV.UL has hired Morgan Stanley (MS.N) and Bank of America Merrill Lynch (BAC.N) on the sale, which could attract interest from funds such as CVC CVC.UL, Blackstone (BX.N), Charterhouse CHCAP.UL, Bain, KKR (KKR.N) and Onex, the sources said.

Hospital chains such as U.S.-based HCA (HCA.N), Germany’s Fresenius Helios (FREG.DE), Australia-based Ramsey Health Care and Malaysia’s IHH (IHHH.KL) may also take an initial look at Spire, but are unlikely buyers as they would either face large antitrust issues or are busy integrating other acquisitions, the sources said.

Cinven bought the hospital assets of Britain’s medical insurance provider BUPA at the height of the buyout boom in 2007 for 1.4 billion pounds and rebranded the group Spire Healthcare.

At the time, it outbid CVC, Terra Firma and BC Partners.

It later acquired more clinics and now has 38 hospitals in the UK, giving it a market share of 18 percent.

As of December 2012, it had 7,700 employees, sales of 739 million pounds and 204.4 million pounds in EBITDAR (earnings before interest, tax, depreciation, amortization and hospital rents).

Bankers said they expected potential buyers to offer about 1.5 billion pounds, or 10-13 times expected operating earnings.

Listed peers like HCA (HCA.N) trade at an average multiple of 9 times expected earnings, according to ThomsonReuters data.

Last year, Spire sold and leased back a 700 million pound property portfolio to raise money to invest in the hospital group, marking a return of such deals since their decline following the financial crisis.

Private healthcare groups are subject to competition scrutiny and Spire is currently under review by Britain’s Competition Commission under criticism that it had grown too large and expensive.

The Commission said in January it could force two healthcare groups, HCA and BMI, to sell a total of nine hospitals to give patients value for money. The final report is due in early April.

The UK private healthcare market was worth around 6.42 billion pounds ($10.74 billion) in 2011, according to the Commission.

Yield-hungry investors who have trouble making money in a low interest rate environment have pushed up valuations of buyouts, but funds remain confident they can find undervalued companies to invest in.

Cinven, Morgan Stanley, Bank of America Merrill Lynch, Blackstone and Bain declined to comment. KKR, CVC and Charterhouse were not immediately available for comment.

($1 = 0.5977 British pounds)

Reporting by Sophie Sassard, Anjuli Davies, Freya Berry in London and Arno Schuetze in Frankfurt; editing by Steve Slater and Tom Pfeiffer

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below