Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Rainbow Children's Medicare / Equity Capital Markets

<ul>
<li>Rainbow Children’s Hospital (RCH) aims to raise around US$250m via issuing a mix of primary and secondary shares in its India IPO.</li>
<li>RCH is a multi-specialty pediatric and obstetrics and gynecology hospital chain in India, operating 14 hospitals and three clinics in six cities, with a total bed capacity of 1,500 beds.</li>
<li>In this note, we will talk about the company's past performance.</li>
</ul>


Rainbow Children’s Hospital (RCH) aims to raise around US$250m via issuing a mix of primary and secondary shares in its India IPO.
RCH is a multi-specialty pediatric and obstetrics and gynecology hospital chain in India, operating 14 hospitals and three clinics in six cities, with a total bed capacity of 1,500 beds.
In this note, we will talk about the company's past performance.


Rainbow Children’s Hospital Pre-IPO - Still Growing but Not All Regions Have Been Performing

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Hospital operator <a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a> has <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02511581-2A1369312?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> an unsolicited, non-binding Offer from KKR, by way of a Scheme, at A$88.00/share, in cash, a 36.7% premium to last close.</li>
<li>Presumably, Paul Ramsay's Ramsay Foundation, Ramsay's largest shareholder, is supportive, otherwise there is no deal.</li>
<li>Due diligence has been granted. If successful, this would be one of the largest LBOs by a private equity outfit in Australia. </li>
</ul>


Hospital operator Ramsay Health Care (RHC AU) has announced an unsolicited, non-binding Offer from KKR, by way of a Scheme, at A$88.00/share, in cash, a 36.7% premium to last close.
Presumably, Paul Ramsay's Ramsay Foundation, Ramsay's largest shareholder, is supportive, otherwise there is no deal.
Due diligence has been granted. If successful, this would be one of the largest LBOs by a private equity outfit in Australia. 


Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>A KKR led consortium has made a conditional, non-binding, indicative proposal to acquire 100% of the shares in <a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a> at A$88/share in cash.</li>
<li>The offer values <a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a> at A$20.14bn and is a premium of 36.7% to the last close. The premium is over 30% even using longer term VWAPs.</li>
<li>There will be changes to the S&amp;P/ASX family of indices to maintain the number of index members. We will know more once an indicative timeline is published.</li>
</ul>


A KKR led consortium has made a conditional, non-binding, indicative proposal to acquire 100% of the shares in Ramsay Health Care (RHC AU) at A$88/share in cash.
The offer values Ramsay Health Care (RHC AU) at A$20.14bn and is a premium of 36.7% to the last close. The premium is over 30% even using longer term VWAPs.
There will be changes to the S&amp;P/ASX family of indices to maintain the number of index members. We will know more once an indicative timeline is published.


Ramsay Health Care (RHC AU): Indicative Proposal from KKR & Index Implications

Last Week in Event SPACE: Sing Air, JD Logistics, China Mobile, Angang/Bengang, Link Admin, Xiaomi

European Event-Driven Analyst

Jesus Rodriguez Aguilar

On 26 May, <a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a> signed an agreement to acquire <a href="https://www.smartkarma.com/entities/spire-healthcare-group-plc" target="_blank" data-smartkarma-citation="entities:22159:1" rel="noopener">Spire Healthcare (SPI LN)</a> from Mediclinic and others. Consideration is 240p, in cash, adjustable for any dividend or capital distribution at the discretion of the bidder. Mediclinic failed to acquire Spire (at a 25% higher price back then) and is tendering its 29.9% stake.
<div>
Consideration represents 1.9x EV/Fwd Revenue, 10.5x EV/Fwd/EBITDA and 38.9x Fwd P/E. Past acquisitions in the sector have been carried out at a median 11.7x EV/EBITDA. Premium vs. prior trading session is 24.4%.
Ramsay wants to enlarge its UK footprint, and increase the NHS mix in the merged UK operations (thus diversification of revenue as it seems difficult to grow through private payers exclusively). Margins from treatment provided on behalf of NHS are not dissimilar to those from private practice. NHS will have to deal with an increase in the waiting lists due to the pandemic. There is some mention to synergies but those will not presumably come until 2023. There are some issues regarding Ramsay's leverage, although it may need to divest some UK assets anyway to obtain the green light from the CMA.
Spire has been obtaining a ROIC of 3.3% lately, below WACC, which I conservatively estimate at 8.5% in my DCF valuation, so the business is likely to have been destroying value over the last FYs. Scale and better management may be behind the acquisition.
</div>
On the day of the offer announcement, shares in Spire were up 52p, c. 27%, and closed at 245p, above Ramsay’s offer. Ramsay earlier closed down 0.7% on the Australian Stock Exchange. As I Finnish this Insight, Spire is trading at 247p. 
Considering the premium offered, and that Mediclinic will tender its stake, I think interloper risk is unlikely. 
As in the case of <a href="https://www.smartkarma.com/entities/udg-healthcare-plc" target="_blank" data-smartkarma-citation="entities:22193:1" rel="noopener">UDG Healthcare (UDG LN)</a> (see <a href="https://www.smartkarma.com/insights/cd-r-udg-healthcare-recommended-cash-offer" target="_blank" data-smartkarma-citation="insights:51370" rel="noopener">CD&amp;R/UDG Healthcare: Recommended Cash Offer</a> ), investors may want a premium over 24%, the shares are trading at 247p, c. 3% above the offer. Folks may have been using too high discount rates for UK listed healthcare, as there have been a number of bids lately in this sector (UDG, <a href="https://www.smartkarma.com/insights/carlyle-vectura-group-expectations-of-a-sweetened-bid" target="_blank" data-smartkarma-citation="insights:52066" rel="noopener">Carlyle/Vectura Group: Expectations of a Sweetened Bid</a>, Spire, among others).
Gross spread is a negative (2.9)%. Recommendation is long SPI LN, TP 256.5p (blended average of comps and DCF), 3.8% upside to current market levels and c. 7% above offer price. Downside risk is limited and expectations of a sweetened bid are high.

On 26 May, Ramsay Health Care (RHC AU) signed an agreement to acquire Spire Healthcare (SPI LN) from Mediclinic and others. Consideration is 240p, in cash, adjustable for any dividend or capital distribution at the discretion of the bidder. Mediclinic failed to acquire Spire (at a 25% higher price back then) and is tendering its 29.9% stake.

Consideration represents 1.9x EV/Fwd Revenue, 10.5x EV/Fwd/EBITDA and 38.9x Fwd P/E. Past acquisitions in the sector have been carried out at a median 11.7x EV/EBITDA. Premium vs. prior trading session is 24.4%.
Ramsay wants to enlarge its UK footprint, and increase the NHS mix in the merged UK operations (thus diversification of revenue as it seems difficult to grow through private payers exclusively). Margins from treatment provided on behalf of NHS are not dissimilar to those from private practice. NHS will have to deal with an increase in the waiting lists due to the pandemic. There is some mention to synergies but those will not presumably come until 2023. There are some issues regarding Ramsay's leverage, although it may need to divest some UK assets anyway to obtain the green light from the CMA.
Spire has been obtaining a ROIC of 3.3% lately, below WACC, which I conservatively estimate at 8.5% in my DCF valuation, so the business is likely to have been destroying value over the last FYs. Scale and better management may be behind the acquisition.

On the day of the offer announcement, shares in Spire were up 52p, c. 27%, and closed at 245p, above Ramsay’s offer. Ramsay earlier closed down 0.7% on the Australian Stock Exchange. As I Finnish this Insight, Spire is trading at 247p. 
Considering the premium offered, and that Mediclinic will tender its stake, I think interloper risk is unlikely. 
As in the case of UDG Healthcare (UDG LN) (see CD&amp;R/UDG Healthcare: Recommended Cash Offer ), investors may want a premium over 24%, the shares are trading at 247p, c. 3% above the offer. Folks may have been using too high discount rates for UK listed healthcare, as there have been a number of bids lately in this sector (UDG, Carlyle/Vectura Group: Expectations of a Sweetened Bid, Spire, among others).
Gross spread is a negative (2.9)%. Recommendation is long SPI LN, TP 256.5p (blended average of comps and DCF), 3.8% upside to current market levels and c. 7% above offer price. Downside risk is limited and expectations of a sweetened bid are high.

Australia

Ramsay Health Care Ltd. provides health care services. The Company offers private hospital services, including, rehabilitation, psychiatric care, day, and complex surgery. Ramsay Health Care owns, operates, and manages health care facilities throughout Australia, Indonesia, and Europe.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Ramsay Health Care (RHC AT)

Rainbow Children’s Hospital Pre-IPO - Still Growing but Not All Regions Have Been Performing

Rainbow Children’s Hospital (RCH) aims to raise around US$250m via issuing a mix of primary and secondary shares in its India IPO.

Sumeet Singh

Ramsay Health Care (RHC AU): Indicative Proposal from KKR & Index Implications

A KKR led consortium has made a conditional, non-binding, indicative proposal to acquire 100% of Ramsay Health Care (RHC AU) at A$88/share in cash....

Brian Freitas

Last Week in Event SPACE: Sing Air, JD Logistics, China Mobile, Angang/Bengang, Link Admin, Xiaomi

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Ramsay Health Care/Spire Healthcare

Investors may want a premium over 24%. Gross spread is (2.9)%. Long SPI LN, TP 256.5p (average of comps and DCF), c. 7% above offer. Limited...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Rainbow Children’s Hospital Pre-IPO - Still Growing but Not All Regions Have Been Performing

Rainbow Children’s Hospital (RCH) aims to raise around US$250m via issuing a mix of primary and secondary shares in its India IPO.

Sumeet Singh

KKR Bids $88/Share For Ramsay Health

The Offer is indicative - for now. Trading at gross/annualised spread of 6.7%/12.6%, assuming early November completion. Not bad. Even better if...

David Blennerhassett

Ramsay Health Care (RHC AU): Indicative Proposal from KKR & Index Implications

A KKR led consortium has made a conditional, non-binding, indicative proposal to acquire 100% of Ramsay Health Care (RHC AU) at A$88/share in cash....

Brian Freitas

Last Week in Event SPACE: Sing Air, JD Logistics, China Mobile, Angang/Bengang, Link Admin, Xiaomi

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Ramsay Health Care/Spire Healthcare

Investors may want a premium over 24%. Gross spread is (2.9)%. Long SPI LN, TP 256.5p (average of comps and DCF), c. 7% above offer. Limited...

Jesus Rodriguez Aguilar