Deal focus: Permira takes the I-Med baton from EQT

Permira’s debut investment in Australia has come more than a decade after the private equity firm established a presence in the region – although this wasn’t for lack of effort in examining opportunities.

“We’ve always looked for situations where we bring sector experience and expertise through prior deals we’ve done or through existing portfolio companies that offer some level of help to management,” says Alex Emery, Asia head at Permira. “Often it’s also been in areas where we can bring ideas and best practices to Australia from other markets as well as help Australian companies think about how they can expand into markets where we have a presence.”

In I-Med Radiology Network, Permira believes it has found a business that meets these criteria. The GP prevailed during a protracted sale process and has agreed to buy the asset from EQT Partners – the owner since 2014 alongside co-investors Caisse de dépôt et placement du Québec of Canada (CDPQ) and GIC Private – for an enterprise valuation said to be around A$1.3 billion ($1 billion).

Healthcare is one of Permira’s five core sectors, and in Switzerland-based Althea it already has one of the largest global providers of healthcare technology. It supplies medical equipment, including diagnostic imaging devices, to more than 1,700 healthcare facilities. By exploiting synergies within the client base, Permira wants to help I-Med expand its footprint.

Under EQT, Australia has been the company’s primary focus. This was understandable in the early days, given I-Med was still in the process of rebuilding following a near bankruptcy and a period of credit ownership. On top of that, Australia is an attractive market: its population is aging, there is higher incidence of chronic disease, and greater focus on early detection and preventative treatment. The diagnostic market is also fragmented and dominated by private clinics.

Through a combination of organic growth and acquisitions, EQT turned I-Med into a business that performs around five million procedures a year across 204 clinics, with more than 3,500 staff, including over 300 radiologists. Revenue came to nearly A$700 million in the 2017 financial year. Permira will continue to pursue consolidation at home – the leadership team is staying in place with an equity stake in the business – but it also wants to go overseas.

“New Zealand is a very suitable jurisdiction from a regulatory perspective, but we are also considering other parts of Asia Pacific as well as Europe and the US,” says Serena Bian, an investment director with Permira. There is an acceptance that in markets with very different regulatory frameworks local partners might be required.

Beyond that, there are plans to invest in technologies, such as artificial intelligence, that help radiologists make diagnoses faster and with greater accuracy. “It’s an area that’s developing rapidly around the world and we want I-Med to stay at the forefront,” Emery adds.   

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• Topics
• Australasia
• Buyouts
• Healthcare
• Technology
• Australia
• Permira Advisers
• EQT Partners