AMP Capital exits Australia care home stake to Singapore’s G.K. Goh

At the same time, AMP Life - like AMP Capital, a subsidiary of Australia and New Zealand wealth management provider AMP - will increase its holding in DPG from 42.5% to 47.62%, matching GKGH's stake. The remaining stake is held by company management. GKGH and AMP Life have each committed to invest a further A$25 million when needed.

AMP Capital will continue to manage the investment on behalf of all shareholders. The transaction, which is subject to various regulatory approvals, values DPG at 9.1x EBITDA or 22.5x price-to-earnings (P/E), based on earnings for the year ended June 2013.

"Since AMP Capital acquired its initial aged care investment asset on behalf of clients in 2005, we've managed the acquisition of DPG and significantly invested in the business, including recruiting a professional and dedicated management team, putting in place new systems, training and stronger governance to ensure that DPG's residents are receiving quality care," said Sally Evans, head of aged care at AMP Capital, in a statement.

DPG manages 55 facilities totaling more than 4,500 beds in New South Wales, Queensland, Victoria and Western Australia.

Australia's residential care sector is expected to grow by 40% in the next 10 years, as the country's population ages, and an estimated A$25 billion will be required to construct new facilities and rebuild existing ones. The market is highly fragmented with 1,054 providers operating 2,716 residences with over 182,000 beds. The top five providers, including DPG, have a combined 15% market share.

"Demand for aged care services will continue to rise for the next few decades in Australia. DPG fits well into our portfolio of long-term investments," said Goh Geok Khim, executive chairman of GKGH.

There is already significant private equity exposure to care homes in Australia and New Zealand.

Regis Group, Australia's second-largest private senior care home operator, 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.

Also in 2013, Archer Capital acquired Primelife Aged Care - one of Australia's top five for-profit aged care operators - from Lend Lease Group, while Blue Sky Private Equity invested more than A$20 million for around 40% of retirement community operator and developer Oak Tree Group.

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• Topics
• Australasia
• Exits
• Real estate
• AMP Capital Investors
• Exit
• Singapore
• Australia
• Real estate
• Trade sale