SYDNEY (Reuters) - Canadian landlord NorthWest Healthcare Properties REIT (NWH_u.TO) announced a $312 million strategic investment in Australian hospital operator Healthscope (HSO.AX) as part of a plan to buy its real estate amid a private equity takeover bid for the firm.
NorthWest said on Tuesday it has acquired a 10 percent interest in Healthscope through a derivative transaction. The A$416 million ($312 million) deal gives it 10.1 percent of the voting rights at the Australian company.
That would hand NorthWest the second-biggest voting block at Healthscope, behind only pension fund AustralianSuper, a partner in the $3.1 billion takeover bid launched late last month by high-profile domestic private equity firm BGH Capital.
With the investment, Canada’s top non-government medical landlord now has a big say in the takeover bid, which Healthscope is assessing, as it dangles the promise of a quick spin-off of the 45 hospital properties held by Australia’s second-largest hospital operator.
It also sent Healthscope shares as much as 4.2 percent higher to A$2.50 on Monday, above the BGH bid price of A$2.36 in a flat market, as investors speculated it could bring on a bidding war amid a slew of deals in the sector.
“Rolling the property portfolio into a vehicle could be possible, so this action could facilitate the current bid,” Morningstar analyst Chris Kallos told Reuters in an email.
Healthscope, AustralianSuper and BGH declined to comment.
“Our interest is in acquiring the real estate assets and we are interested in discussions with all parties who may be interested in resolving such a transaction,” John Frey, an external spokesman for NorthWest, told Reuters by phone.
“We’ve got a seat at the table.”
NorthWest said it paid A$2.39 per share for the 10 percent interest, which it holds via Deutsche Bank derivatives.
Healthscope listed at A$2.10 in a 2014 float engineered by TPG Capital Management [TPG.UL] and Carlyle Group (CG.O). It initially enjoyed a warm reception thanks to expectations it would benefit from the country’s aging population and a heavily state-subsidized health system.
But high debts and a shift back to public health services after a scandal in the private health sector have hurt its performance and lured bidders.
The BGH offer - one of the highest for an Australian firm in the past year - is the first one for the private equity outfit named after ex-Macquarie banker Robin Bishop, and Ben Gray and Simon Harle, prominent dealmakers who used to lead the Australian team at TPG Capital Management.
“In previous roles, the BGH private equity team have implemented sale and leaseback deals following business acquisitions,” said Hayden Strickett, an equities analyst at Auckland brokerage Forsyth Barr.
“BGH Capital could pursue a similar strategy with HSO,” he added.
Reporting by Tom Westbrook in SYDNEY. Additional reporting by Chris Thomas in BENGALURU; Editing by Simon Cameron-Moore and Muralikumar Anantharaman