Bain pursues buyout of Australia's Estia Health

The private equity firm has proposed to buy all of the shares in the company for AUD 3.00 apiece, a 28% premium to the closing price on March 23.

The stock spiked 25% following the offer and was trading at AUD 2.68 as of midday March 24, giving the company a market capitalisation of AUD 692.4m.

Estia shares had traded in a range of AUD 1.95 to AUD 2.5 since November, but started to move on March 21, with local media reports that a potential acquirer was buying shares. In a filing confirming the Bain offer, Estia said it was still not aware of the identity of the party or parties that had acquired shares over the prior two days.

Estia was founded in 2005 and traces its current structure back to 2014 following a merger with two other aged care providers Padman Health Care, now Premier Health Care, and Cook Care. A further expansion came in 2016 with the acquisition of retirement village operator The Kennedy Homes.

The company is now one of the largest players in its space locally with 72 homes across four states. This footprint facilitates care for more than 8,000 residents a year. Since 2019, it has leveraged a partnership with industry software provider CarePage to digitalise customer feedback.

Revenue for the 12 months ended June 2022 was AUD 671.1m, up from AUD 646.3m a year earlier. Over the same period, the company swung from a net profit of AUD 5.6m to a net loss of AUD 52.4m, largely due to a bed licence amortisation charge tied to the proposed abolition of Australia's aged care licencing regime.

Estia has a history of private equity investment, with Quadrant Private Equity having invested AUD 90m in 2013 and Mercury Capital committing AUD 27.5m the following year. The company went public in December 2014, with Quadrant reducing its stake from 57.5% to 17.1% and Mercury going from 14.1% to 4.2%. Both investors subsequently made full exits.

Bain’s experience in the aged care segment includes participation in a management-led buyout of Japan-listed Nichii Gakkan in 2020, which valued the nursing home business at around USD 1.1bn. Nichii Gakkan currently has 1,403 long-term care facilities nationwide and partners with more than 8,000 medical institutions.

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• Topics
• North Asia
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• Bain Capital Asia