IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

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Event-Driven

<ul>
<li>On 22 July, <a href="https://www.smartkarma.com/entities/arvida-group-ltd" target="_blank" data-smartkarma-citation="entities:14485:1" rel="noopener">Arvida (ARV NZ)</a> entered a scheme implementation agreement with Stonepeak at NZ$1.70, a 65.0% premium to the undisturbed price.</li>
<li>The transaction will require OIO approval, statutory supervisors' consent and shareholder approval. The <a href="https://www.smartkarma.com/entities/metlifecare-ltd" target="_blank" data-smartkarma-citation="entities:19219:1" rel="noopener">Metlifecare Ltd (MET NZ)</a> precedent suggests that the OIO and statutory supervisor should be forthcoming.</li>
<li>The offer is attractive, and shareholders representing 18% of outstanding shares are supportive. At the last close and for a November payment, the gross/annualised spread was 4.9%/14.2%.  </li>
</ul>


On 22 July, Arvida (ARV NZ) entered a scheme implementation agreement with Stonepeak at NZ$1.70, a 65.0% premium to the undisturbed price.
The transaction will require OIO approval, statutory supervisors' consent and shareholder approval. The Metlifecare Ltd (MET NZ) precedent suggests that the OIO and statutory supervisor should be forthcoming.
The offer is attractive, and shareholders representing 18% of outstanding shares are supportive. At the last close and for a November payment, the gross/annualised spread was 4.9%/14.2%.  


Arvida Group (ARV NZ): Stonepeak’s Binding Proposal at NZ$1.70

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<strong><a href="https://www.smartkarma.com/entities/arvida-group-ltd" target="_blank" data-smartkarma-citation="entities:14485:1" rel="noopener">Arvida (ARV NZ)</a></strong>, a leading retirement living and aged care service provider in New Zealand, <a href="https://www.arvida.co.nz/investors/nzx-releases/release/arvida-board-unanimously-recommends-stonepeak-acquisition-38581" target="_blank" rel="noopener">announced</a> a Scheme from PE-outfit Stonepeak at NZ$1.70/share, in cash, a 65% premium to undisturbed. </li>
<li>The Offer has unanimous board support. ~18% of shares out are supportive. Standard Scheme voting applies. Consent from NZ's Overseas Investment Office also required. </li>
<li>A Scheme Meeting is expected to be held in 4Q24 with implementation in the same quarter. Optics are a tad opportunistic; but this looks priced to complete. </li>
</ul>



Arvida (ARV NZ), a leading retirement living and aged care service provider in New Zealand, announced a Scheme from PE-outfit Stonepeak at NZ$1.70/share, in cash, a 65% premium to undisturbed. 
The Offer has unanimous board support. ~18% of shares out are supportive. Standard Scheme voting applies. Consent from NZ's Overseas Investment Office also required. 
A Scheme Meeting is expected to be held in 4Q24 with implementation in the same quarter. Optics are a tad opportunistic; but this looks priced to complete. 


New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

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Thematic (Sector/Industry)

<ul><li>The proposed acquisition of Arvida Group (ARV) by Stonepeak Alps BidCo injected meaningful optimism into the listed aged care sector.</li><li>And rightly so. The aged care sector is suffering from a combination of (1) a lack of confidence in the business model driven by years of weak cash generation; (2) concerns around house prices and interest rates; and (3) an overly negative outlook on care profitability.</li><li>Whilst all issues are understandable, we view them as largely backward looking. </li></ul>

The proposed acquisition of Arvida Group (ARV) by Stonepeak Alps BidCo injected meaningful optimism into the listed aged care sector.And rightly so. The aged care sector is suffering from a combination of (1) a lack of confidence in the business model driven by years of weak cash generation; (2) concerns around house prices and interest rates; and (3) an overly negative outlook on care profitability.Whilst all issues are understandable, we view them as largely backward looking. 

Aged Care Sector - M&A Arrives to Aged Care

<ul><li>Over the last six months the three aged care operators with March year ends are down a further ~-20%, with Ryman Healthcare (RYM) the worst performer.</li><li>Its market cap is now two thirds of what it was a decade ago, when it was about to report annuity earnings of NZ$59m, compared to the all-time high of NZ$187m we expect it to report for FY24.</li><li>It is easy to look at the share prices and conclude that it is all doom and gloom in aged care land, but we disagree. (1) Care profits are depressed but margins are improving for the first time in a decade, the glass half full approach would suggest we should pay a higher multiple for depressed but recovering earnings. </li></ul>

Over the last six months the three aged care operators with March year ends are down a further ~-20%, with Ryman Healthcare (RYM) the worst performer.Its market cap is now two thirds of what it was a decade ago, when it was about to report annuity earnings of NZ$59m, compared to the all-time high of NZ$187m we expect it to report for FY24.It is easy to look at the share prices and conclude that it is all doom and gloom in aged care land, but we disagree. (1) Care profits are depressed but margins are improving for the first time in a decade, the glass half full approach would suggest we should pay a higher multiple for depressed but recovering earnings. 

Aged Care Sector - More Sellers than Buyers

<ul><li>After four turbulent years in the housing market, both generally and within the aged care sector specifically, we are broadly back to normal across the board.</li><li>House prices and housing turnover are back to trend and the aged care companies have seen their post COVID pricing buffers return to largely zero.</li><li>The aged care companies built up a massive incremental ~+20% pricing buffer in 2021, only for it to be entirely depleted (and some) through 2022/23 as they first increased unit prices then held steady in a steeply falling housing market. </li></ul>

After four turbulent years in the housing market, both generally and within the aged care sector specifically, we are broadly back to normal across the board.House prices and housing turnover are back to trend and the aged care companies have seen their post COVID pricing buffers return to largely zero.The aged care companies built up a massive incremental ~+20% pricing buffer in 2021, only for it to be entirely depleted (and some) through 2022/23 as they first increased unit prices then held steady in a steeply falling housing market. 

Aged Care Sector - Montgomerie-Ibbotson Aged Care Pricing

New Zealand

Ryman Healthcare Limited provides private health care services through its development, management and operation of retirement villages, nursing homes and geriatric hospitals.  The Company's facilities are located in Christchurch, Dunedin, Invercargill and Wellington.

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Ryman Healthcare (RYM NZ)

Arvida Group (ARV NZ): Stonepeak’s Binding Proposal at NZ$1.70

The offer is attractive, and shareholders representing 18% of outstanding shares are supportive. At the last close and for a November payment, the...

Arun George

Arvida (ARV NZ): Stonepeak's Offer

Assuming mid-Dec payment, this is trading at a reasonable gross/annualised spread of 4.9%/12.6%. Also run a ruler over other NZ peers such as...

David Blennerhassett

Aged Care Sector - M&A Arrives to Aged Care

The proposed acquisition of Arvida Group (ARV) by Stonepeak Alps BidCo injected meaningful optimism into the listed aged care sector.

Forsyth Barr

Aged Care Sector - More Sellers than Buyers

Over the last six months the three aged care operators with March year ends are down a further ~-20%, with Ryman Healthcare (RYM) the worst performer.

Forsyth Barr

Aged Care Sector - Montgomerie-Ibbotson Aged Care Pricing

After four turbulent years in the housing market, both generally and within the aged care sector specifically, we are broadly back to normal across...

Forsyth Barr

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