British hospital group Spire to list on LSE – Reuters

Reuters – 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 million pounds.

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 year.

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)