Two Chinese healthcare companies are among investors seeking to buy Australia’s I-MED Radiology Network in a deal that could value the X-ray provider at more than A$1 billion (US$765 million), people with knowledge of the matter said.
Shenzhen-listed Tonghua Golden-Horse Pharmaceutical Industry and Hong Kong-listed Golden Meditech Holdings are likely to participate in a second round of bidding, three people told Reuters.
Ontario Teachers’ Pension Plan (OTPP), Canada’s third-largest public pension plan, and London-based private equity firm Permira, are also expected to submit separate bids, two of the people said.
Binding bids are due by the end of this month.
Chinese interest in Australia’s biggest X-ray provider comes as Beijing strives to overhaul China’s healthcare sector and boost its competitiveness in overseas markets, with acquisitions one of the key planks for that drive.
With nearly 200 clinics cross Australia, I-MED has 18 percent of the nation’s diagnostic imaging services market, which is partially subsidized by the government, according to a September report by researcher IBISWorld.
I-MED’s owner, Swedish private equity firm EQT Holdings, has hired Morgan Stanley and Rothschild to manage the sale process, the people said, who declined to be identified as the deal process is not public.
Representatives from Tonghua Golden-Horse, Golden Meditech, I-MED, Ontario Teachers’ and Rothschild did not respond to Reuters requests for comment. EQT, Morgan Stanley and Permira declined to comment.
I-MED booked A$608 million in sales and A$100 million in EBITDA in its 2016 financial year, according to EQT’s website. The company, which has benefited from Australia’s ageing population, is likely to be valued at around 10-12 times its 2017 EBITDA, one of the people said.
Tonghua Golden-Horse plans to form a consortium with Chinese financial investors for the second round of bidding, said the same person, adding that the company had preliminary approval from the country’s top economic planner for the acquisition.
In a stock filing with Shenzhen bourse last week, Tonghua Golden-Horse said it and its controlling shareholder planned to set up a fund worth up to US$1.2 billion, which would be used to fund an acquisition of I-MED if it won the auction.
Other recent overseas acquisitions involving Chinese healthcare companies include an agreement by Shandong Weigao Group Medical Polymer in September to acquire U.S.-based Argon Medical Devices Holdings for US$850 million. In May, China’s Hengkang Medical agreed to buy a 70 percent stake in Australia’s PRP Diagnostic for about US$250 million, aiming to gain advanced medical know-how to serve an affluent middle-class back home.
EQT acquired I-MED in 2014 from a consortium of more than 20 hedge funds, and a year later it cancelled plans for a public float of the Australian company, citing volatility in global markets.
(Reporting by Carol Zhong of Basis Point, Julie Zhu in Hong Kong and Paulina Duran in Sydney; Additional reporting by Kane Wu in Hong Kong; Editing by Sumeet Chatterjee and Edwina Gibbs)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of EQT