Deal focus: Quadrant cashes in on Icon’s growth potential

When Quadrant Private Equity bought Icon Cancer Care in 2014 for an enterprise valuation of less than A$100 million ($75 million), the company had four cancer day centers in Queensland and one in Adelaide. Three years on, it is a platform offering a range of cancer care services across more than 36 sites in four geographies. Based on Quadrant’s exit valuation, the business is worth A$1 billion.

“In terms of taking the chemotherapy business, which was largely based in Queensland, and turning it into a multinational integrated cancer business, this company has achieved more than any I have been involved with in 25 years in private equity,” says Marcus Darville, a managing partner at Quadrant.

The new owners, QIC, Goldman Sachs and Pagoda Investment, want to sustain this expansion by helping Icon develop in Asia. “QIC provides great local support, particularly in Queensland; we provide on-the-ground support in China; and Goldman is an international player with lots of healthcare resources,” says James Ieong, a managing partner at Pagoda who previously led QIC’s investments in China. “It is a three-party consortium that can lead the company to further growth.”

Icon – which is now known as Icon Group – runs a network of facilities that offer day oncology and hematology services, radiation oncology treatment, chemotherapy compounding, and pharmaceutical supply services. Quadrant invested significant additional capital

Quadrant invested significant additional capital in building out the business: radiation oncology has supplanted cancer day care as Icon’s biggest area following the roll-out of 16 centers over an 18-month period at a cost of about A$7 million apiece. Four facilities were opened in Singapore, two are under construction in New Zealand, and there are five established or in development in mainland China through a joint venture with Guizhou Yibai Pharmaceutical.

“From fairly early on, when we thought about where we might go offshore, Asia Pacific was the natural route,” says Darville. “We then did a review of the opportunities and that’s how the Singapore opportunity came about. In China we wanted a capital light, intellectual property-protected approach. The new owners may tweak it to some degree, but as a group with an Australian base it made sense for us.”

The market potential of China is huge, as illustrated by a report published last year in “CA: A Cancer Journal for Clinicians” that predicted there would be about 4.29 million newly diagnosed cases in 2015 and 2.81 million fatalities as a result of the disease.

“There is a desperate need for advanced cancer treatment – the knowledge, expertise, training, and services. That will be our key mandate during the holding period,” says Ieong. “We will help grow the Icon brand in China. In particular, the company has a remote diagnosis service, which will enable local oncology centers to benefit from the expertise developed in Brisbane.” 

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• Topics
• Australasia
• Buyouts
• Trade sale
• Healthcare
• Australia
• China
• Quadrant Private Equity
• QIC
• Goldman Sachs