Pacific Equity Partners (PEP) is close to exiting its large majority stake in New Zealand-based private hospitals business Evolution Healthcare to QIC (Queensland Investment Corporation) and Sunsuper, two of Australia’s largest institutional investors.
PEP put Evolution up for sale in September probably anticipating it would attract interest from institutional investors interested in making direct investments for long-term hold in ‘infrastructure-plus’ assets, assets that comprise essential physical infrastructure plus business operations with potential for improved performance.
QIC and Sunsuper have entered into a binding agreement to acquire Evolution, which is New Zealand’s second largest private hospitals operator.
The value of the investment has not been disclosed but it has been speculated Evolution could be worth as much as $700 million.
PEP acquired its large majority stake in Evolution in 2018 from Roc Partners and a Goldman Sachs special situations fund.
Evolution is to continue to be led by current chief executive Sue Channon and her existing management team.
The Evolution business comprises five surgical hospitals including Wakefield and Bowen hospitals in Wellington, Royston hospital in Hawke’s Bay and Waratah Private Hospital in Sydney plus five day-hospitals and a portfolio of ancillary healthcare facilities across New Zealand. More than 300 surgeons carried out more than 57,000 elective surgery procedures in Evolution operating theatres over the 2021 financial year.
QIC’s stake in the business is to be acquired by its Global Infrastructure Fund.
QIC expects to be able leverage its Australian healthcare sector experience, gained through its investment in Nexus Hospitals, to take advantage of significant organic expansion opportunities for Evolution set to flow from forecast strong growth in demand for elective surgery procedures.
QIC’s head of global infrastructure, Ross Israel, said Evolution Healthcare was a long-standing and dominant healthcare operator with strong incumbent positions in key areas; it had an experienced management team and strong potential for organic growth and expansion.
“This investment is wholly aligned with our sector-centric, thematic-based infrastructure investment strategy,” he said. “It leverages one of our key megatrends, an ageing population, and the secular tailwinds of increased chronic illness and growing healthcare needs arising from public health constraints.”
Head of private markets at Sunsuper, Michael Weaver, said: “We are delighted to be making our first investment into the healthcare sub-sector, with Evolution representing a strong platform to leverage the sector thematics around ageing demographics and technology and medical innovation.”
QIC’s Global Infrastructure Fund reached a final close for its second fundraise at its $1 billion hard cap in October. So far in 2021, QIC has made commitments of more than $4 billion globally following key thematics relating to decarbonisation, decentralisation and healthcare.
Including Evolution Healthcare, QIC now has infrastructure investments in 22 assets in six countries across the transport, energy and utilities and social/public-private partnership sectors. These include 12 assets in the Global Infrastructure Fund portfolio across four countries and multiple exposures in QIC’s three core infrastructure sectors.
Image: An operating theatre at an Evolution Healthcare hospital.