September 14, 2017 / 12:29 PM / 9 months ago

Finnish healthcare firm Terveystalo plans IPO ahead of sector reform

HELSINKI (Reuters) - Finland’s largest healthcare company Terveystalo plans to raise around 100 million euros ($119 million) in a return to the Helsinki stock market, hoping to capitalize on reforms expected to open up the sector to more private providers.

Terveystalo, which runs about 180 clinics across Finland, said on Thursday existing shareholders including Swedish private equity firm EQT were also expected to sell some stock alongside the issue of new shares.

The company was listed in Helsinki in 2007-2009 before it was bought by private equity firm Bridgestone.

A key policy of Finland’s center-right government, the healthcare reform is aimed at saving taxpayers money in the face of fast-ageing population, partly by opening more doors to private companies.

However, it has faced several hurdles and was recently delayed to 2020 after a parliamentary committee said some parts of it breached the constitution.

The government is expected to bring an amended bill to the parliament later this year.

“If the reform passes as it stands, the potential revenue growth for the biggest private healthcare companies will be several hundreds of millions (euros),” said Petri Kajaani, an analyst at Inderes Equity Research. He expects Terveystalo to be valued in the listing at around 1 billion euros.

Some Finnish pension funds and other institutional investors have committed to taking a stake of around 36 percent of Terveystalo shares at a maximum valuation for the company of 1.25 billion euros, Terveystalo said.

The company, which did not give a time frame for planned listing, has annual sales of around 700 million euros and is targeting annual revenue growth of 6-8 percent in the long term.

Finland’s private health sector has consolidated recently, with Terveystalo and rivals such as Attendo, Mehilainen and Pihlajalinna buying smaller firms.

“The social and healthcare reform is critical for Finland, and in order to meet the goals ... we need both public and private resources,” Terveystalo CEO Yrjo Narhinen told a press conference.

Carnegie, Morgan Stanley and Skandinaviska Enskilda Banken are among banks arranging the share offering.

Reporting by Jussi Rosendahl and Tuomas Forsell; Editing by Jason Neely and Mark Potter

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