Return to search

After HCA Success, Blackstone Reportedly Looks to Take Vanguard Health Public

Fresh off the success of the HCA IPO, the Blackstone Group is reportedly looking to take Vanguard Health Systems public.

Nashville-based Vanguard, a hospital operator, may file with the SEC later this month, according to Bloomberg. Vanguard may file for the IPO without underwriters, the story said.

Vanguard’s plans come just months after HCA went public, raising $3.8 billion. The offering was the largest private equity-backed IPO ever. HCA, a hospital operator also based in Nashville, is owned by Bain, KKR, BAML Capital Partners and affiliates of founder Dr. Thomas Frist.

An IPO would provide an exit for Blackstone, which has owned Vanguard for nearly seven years. Blackstone, in 2004, acquired Vanguard in a deal valued at $1.75 billion. Morgan Stanley Capital Partners were the seller. Blackstone invested $494.4 million equity for a 66% stake. Morgan Stanley owned 17.4%.

“Blackstone has got to monetize its investment somehow,” one banker says. “They have to get out of [Vanguard] one way or another. They probably concluded that there was no buyer.”

Vanguard operates a network of 26 hospitals. Revenue was about $1.9 billion for the six months ended Dec. 31, 2010 while adjusted EBITDA was $164.1 million, according to an April regulatory filing.

Blackstone’s stake in Vanguard has remained at 66%. The PE firm has already received most of its money back in dividends. In January 2011, Vanguard paid a $444.7 million distribution to its shareholders.

Vanguard also paid a $300 million dividend to its PE owners in January 2010, according to regulatory filings.

The IPO would represent the latest exit for Blackstone from a long-term holding. The PE firm on Wednesday agreed to sell Graham Packaging to Silgan Holdings in a $4.1 billion deal. Blackstone has owned Graham for about 13 years. Also, Last week, Blackstone inked a deal to sell Gold Toe Moretz, the sock company, for about $350 million to Gildan Activewear. Blackstone acquired Gold Toe in 2006.

Officials for Blackstone, Vanguard and Morgan Stanley could not be reached for comment.