British-based private equity firm Permira said it had agreed to buy I-MED Radiology Network and plans to help it expand using experience gleaned investing about A$1.5 billion (€1 billion) of equity in the healthcare sector.
Permira beat off competition from a mix of Chinese strategic buyers and other private equity firms for Australia’s largest diagnostic imaging services firm.
“We had speed and certainty of funding and we can guide I-MED on global best practice and global growth opportunities,” Alex Emery, head of Permira Asia told FinanceAsia.
Goldman Sachs is arranging the funding for Permira. Neither party disclosed the price agreed, but a person familiar with the matter said it was about A$1.2 billion, which works out at about 10 times the company’s earnings before interest, tax, depreciation and amortisation of around A$120 million.
A local peer, Integral Diagnostics, is trading at 21 times earnings on the Australian stock exchange.
“We also had no other assets in Australia; that made the acquisition very clean from a regulatory perspective,” Emery said.
The acquisition marks Permira’s first investment in Australia. Permira expects the deal to close in February.
Permira bought I-MED from Swedish private equity firm EQT Mid Markets funds and other unnamed shareholders.
GROWTH PLANS
Permira is looking to support I-MED’s growth both organically and via acquisitions.
“We expect I-MED to be at the forefront of continued consolidation in Australia," Emery said.
The Australian diagnostic imaging market is one of the most advanced in the world and is growing rapidly as a result of increasing healthcare expenditure, greater health awareness among the general public, a growing ageing population and technological advancement.
The number of deals in the Australian healthcare services sector has been growing every year since 2013, when there were 28 deals, to last year, when there were 69 transactions. The average premium paid in the sector last year was about 26%.
I-MED is already Australia’s largest medical imaging firm and operates over 200 clinics throughout Australia. It employs more than 300 radiologists and 50 nuclear medicine specialists who perform more than four million patient procedures every year.
One hot-button issue in the healthcare sector is data protection. Australia has been tightening its rules on privacy and the government ranked healthcare third in terms of voluntary reporting of breaches by number.
“The security of people’s data is of paramount importance. Given our experience in making healthcare investments we have a track record in following the rules and regulations around privacy,” Emery said.
Other healthcare investments around have included Italian diagnostic imaging company, Althea.
Chairman Paul McClintock, chief executive Steven Rubic and chief financial officer Clare Battellino will remain with I-MED.
