"Window of opportunity" for Medica IPO
publication date: Sep 22, 2009
Could BC Partners be about to float French care home group Medica on Euronext in 2009? A BC spokesman denied reports that a float was imminent, but Paris analysts tell another story. They indicate that BC is actively looking at how to pull the rabbit out of the hat this year. So, could we see a spate of IPOs by private equity houses if stock markets stay strong?
Bought by BC as recently as 2006 from Bridgepoint in deal which valued it at €750m, near the height of the private equity boom, at first sight it is hard to believe that Medica would achieve a rating high enough for BC to make money. But analysts say that, right now, there is a real window of opportunity. “Yes, it is entirely possible,” said Bruno de Rochbrochard at Raymond James.
Another analyst said: “Firstly, values are still high - Orpea, the largest player is still trading at 20-25 times EBIT. Secondly, regulations have not changed, there is plenty of scope for mergers and acquisitions and it is very hard to build a new home. Thirdly, now would be a good time to come to the market as a consolidation play – there are a lot of deals to be had and not, as yet, many competitors. Fourthly, local banks are still very happy to lend money to care home groups.”
Above all, stock markets are strong now – few would bank on them remaining so through 2010.
Our Analysis: We think BC Partners may well float Medica this autumn. Is this a precursor to a wave of IPOs as private equity houses flock to sell assets before a downturn?
We doubt it. Everything depends on the regulations and dynamics in each sector at a national level. For example, we doubt that investors will want to part with lab groups, given that deregulation of the French market which allows rationalisation on an American model, looks likely. On the other hand, the French private hospital sector remains under the cosh, facing low tariff rises and increased subsidies for public sector competitors. That means, for instance, that private equity investor Blackstone is unlikely to float Vitalia, the second largest group, any time soon.
