Virtus to start wooing overseas investors
The IPO will be put to investors in Australia, Britain and parts of Asia and would become the largest Australian equity offering since SCA Property, a Woolworths subsidiary, raised $472 million in November last year.
In documents obtained by BusinessDay, Virtus advisers Morgan Stanley and UBS have valued the company at up to $682 million and $484 million respectively.
Virtus Health, which specialises in IVF science, is 43 per cent-owned by Australian private equity firm Quadrant and medical professionals around the country.
It is understood that the stake held by medical practitioners will be sold down to about 23 per cent, with their shares held in escrow until their retirement.
Quadrant will also dilute its holdings, but sources said the firm had not yet decided by how much.
Virtus operates 34 fertility clinics, 16 embryology labs, 17 andrology labs, six diagnostic labs and six hospitals across NSW, Victoria and Queensland.
According to notes sent by UBS to institutional investors, Virtus holds about 35 per cent of Australia's $520 million assisted reproductive services market.
Australian-listed healthcare companies have enjoyed strong returns in recent times, with the ASX200 health sector jumping 45.6 per cent in 2012 and 10.1 per cent so far in 2013. Although the gains have been relatively solid, UBS pointed out the invariable risks that come with investing in health. "The healthcare sector is highly regulated ... [and] any change in government policies, both operational regulations and funding arrangements could materially affect Virtus' operations and expansion strategy," the report said.
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Virtus Health is launching an initial public offering (IPO) with a management roadshow starting on Monday to attract more than $500 million, with the IPO scheduled for next month and being pitched to investors in Australia, Britain and parts of Asia.
Advisers Morgan Stanley and UBS have given differing pre-IPO valuations for Virtus Health, valuing the company at up to $682 million (Morgan Stanley) and $484 million (UBS), according to documents obtained by BusinessDay.
Before the IPO, Virtus Health is 43% owned by private equity firm Quadrant and medical professionals around Australia. The medical practitioners' stake is expected to be sold down to about 23%, with their shares held in escrow until retirement, and Quadrant will dilute its holdings though it has not decided by how much.
Virtus Health operates 34 fertility clinics, 16 embryology laboratories, 17 andrology laboratories, six diagnostic laboratories and six hospitals across New South Wales, Victoria and Queensland.
According to UBS notes sent to institutional investors, Virtus holds about 35% of Australia's $520 million assisted reproductive services market.
The ASX200 health sector rose 45.6% in 2012 and was up 10.1% so far in 2013, showing strong recent returns for healthcare stocks; however, historical gains don't guarantee future performance and investors should weigh risks specific to healthcare companies.
UBS highlighted that the healthcare sector is highly regulated and that any change in government policies—both operational regulations and funding arrangements—could materially affect Virtus's operations and expansion strategy, representing key risks for investors.
If successful in raising more than $500 million, Virtus Health's IPO would be the largest Australian equity offering since SCA Property, a Woolworths subsidiary, raised $472 million in November of the previous year.
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