KKR’s Elsan acquisition reportedly “a done deal”
KKR’s move to buy CVC’s majority stake in French hospital operator Elsan and pre-empt an auction process is “a done deal”, a well-placed source tells HBI.
“I’m hearing the deal has been done. It was always KKR’s to lose. Head of Healthcare EMEA Inaki Kobo did the Elsan deal when he was at CVC so he knows the asset and minority shareholder Tethys really well,” an investment banking source tell us. CVC has not responded to a request for comment.
The deal could value Elsan at around €3.5bn or 11.5-12.5x EBITDA of €280-300m according to reports, though a different banker indicates it may be towards the lower end of the multiple. Our first source says that debt portability secured last year has helped accelerate this process amidst a tough climate for debt financing.
Rumours of a deal have been rife over the past week. KKR, the third-largest private equity firm in the world by capital raised in the last five years, looks to have beaten several other parties trying to pre-empt a competitive auction process. French financial newspaper Les Echos reported that others in the fray included PAI Partners, Brookfield Asset Management, Ardian and ICG, the latter two as lead investors of a consortium of other parties including BPI France. The second source says it is fair to assume Tethys is staying put and Les Echos says it may want to increase its stake.
Any new owner will struggle to grow Elsan at the same pace as CVC has managed without a substantial international acquisition, considering it is now at €2.3bn sales (2019) and has a 20% share of the for-profit hospital market. A few months ago, we speculated that this made an infrastructure fund the most likely buyer.
Agreeing, our source adds: “Firms like KKR, Brookfield and Carlyle have big long-term funds which are infra-focused in nature and don’t need a tonne of growth.” ICG, Ardian and Brookfield also have infrastructure funds.
Our source adds that Fresenius Helios, the most obvious trade buyer, was never really in the running: “It would normally be all over this asset but in this case, my understanding is they are not because the pricing disparity (between private and public hospitals in France) doesn’t exist in their home market.”
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