Ramsay, which was founded by businessman Paul Ramsay in 1964, has grown into a network of 532 facilities across Australia, the UK, Europe and Asia. The business has faced challenging conditions over the past two years, however, with coronavirus lockdowns restricting elective surgeries and Ramsay entering agreements with governments to help support the public hospital system during COVID surges.

If KKR was successful in its bid it would be its first investment of this kind in the Australian market and would expand the private equity market’s ownership of local healthcare assets.

The bid is being viewed as a play by KKR to unlock the value of Ramsay’s large pool of healthcare assets, which many believe have been undervalued throughout the pandemic. A takeover would give the new owners the opportunity to buy Ramsay’s hospital sites and other healthcare property and then potentially lease these back to the company.

Ramsay’s rival, Healthscope, delisted from the ASX after a 2019 takeover by Brookfield Asset Management.

The Paul Ramsay Foundation is Ramsay’s largest investor, owning 18.8 per cent of the company or close to 43 million shares, which are currently worth $3.5 billion. At the $88 bid price, the stake is worth $3.8 billion.

In a statement, the Ramsay Foundation said assessment of the offer was up to the board, “However, should an offer materialise along the lines canvassed in RHC’s ASX Announcement, PRF would support such an offer being put to shareholders”.

The deal could also allow the foundation to retain some of its stake as part of the new company.

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The bid is the latest play by a global private equity firm for a network of Australian assets. In the healthcare space, UK operator CapVest has recently been battling local investor BGH to take control of fertility treatments business Virtus.

EY Oceania head of mergers and acquisitions, Duncan Hogg, said healthcare has been a hot area for global M&A activity throughout the pandemic and firms clock the importance of health to the welfare of the population and the economy.

“We believe the sector will continue to be attractive to private equity both in Australia and globally given its downside protection coupled with the potential for material upside as the sector transitions through COVID. In our view this will drive further healthcare M&A during 2022,” Hogg said.

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