Bain set for $630m buyout of Australia's Estia Health

The private equity firm will buy all outstanding shares for AUD 3.20 apiece, with an adjustment to account for future dividend payments. This represents a 50% premium to the closing price on March 21, immediately prior to Bain approaching the company. Its initial bid was AUD 3.00 per share; this was increased to AUD 3.20 per share in June.

Estia’s stock was up 11.1% at AUD 3.09 as of late morning trading on August 7, giving the company a market capitalisation of about AUD 800m. The scheme still needs to be approved by a majority of shareholders.

“Bain Capital’s interest in Estia Health is a strong endorsement of our strategy to build a market-leading aged care provider focused on creating high-quality outcomes for our residents and families and an attractive and supportive environment for our employees,” said Sean Bilton, Estia’s CEO, in a statement.

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. Retirement village operator The Kennedy Homes was added in 2016. M&A expansion has remained a prominent theme: Estia announced the purchase of a care facility in Victoria last month.

The company is now one of the largest providers of residential aged care in Australia operating 6,716 resident places across 73 homes in New South Wales, Queensland, South Australia, and Victoria. More than 8,000 residents were cared for by approximately 7,500 nurses, carers, and support staff in the 2022 financial year.

Australia’s residential aged care industry comprised 2,704 homes operated by 830 approved providers as of June 2021. With the number of people aged over 85 projected to grow by 60% in the coming decade as the impact of COVID-19 decreases and bed licensing ends. Residential aged care received AUD 14.3bn of the total AUD 23.6bn in government spending on aged care in the 2021 financial year.

Estia’s revenue for the 12 months ended June 2022 was AUD 671.1m, up from AUD 646.3m a year earlier. Over the same period, it 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 aged care licencing.

Estia has a history of private equity investment. Quadrant Private Equity acquired a majority interest in the company in 2013 and Mercury Capital invested the following year. Both exited following Estia’s IPO in December 2014.

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• Topics
• Australasia
• Healthcare
• Buyouts
• Australia
• Bain Capital Asia