Blue Sky invests $18m in Australian retirement home chain

Oak Tree is focused on affordable senior living. It owns six retirement villages in the states of New South Wales, Queensland, Victoria and Tasmania. There are nine new ones under development, including two acquisitions and conversions. The company plans to add three to five new villages per year thereafter.

As part of the deal, Andrew Champion and Tim Wilson, both managing directors at BSPE, will join the Oak Tree board.

The investment will be used to add capacity at six existing locations, by developing and operating up to 2,000 additional independent living units for seniors over the next five years.

The ageing Australian population is expected to increase demand for senior living facilities, with the country's Retirement Village Association forecasting the need for 140,000 new independent living units over the next 15 years.

Champion said that he expects Oak Tree to benefit from this trend. "It is one of the only scalable corporate operators in the under-serviced regional affordable niche," he said.

The business model is underpinned by development profits and a growing bank of tangible assets with an annuity style revenue stream. Prices at Oak Tree start from A$113,000 for a self-contained one bedroom home. It delivers homes at a discount to median house prices in its catchments, according to Champion.

There is significant PE exposure to care homes in Australia. The country's second-largest private senior care home operator, Regis Group, is owned by the private equity arm of Macquarie Bank.

In New Zealand, Quadrant Private Equity assumed control of Summerset, the country's second-largest care home operator, between 2008 and 2010, took it public in 2011 and made a second partial exit in May.

Earlier in 2013, Archer Capital acquired Primelife Aged Care - one of Australia's top five for-profit aged care operators - from Lend Lease Group for A$270 million and renamed the business Allity.

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• Topics
• Australasia
• Consumer
• Expansion
• Australia
• Blue Sky Private Equity
• Consumer
• Growth capital