HBI Deals+Insights / News

Another one bites the dust

Healthcare specialist REIT Icade Sante may be the latest victim of capital markets’ apathy for European healthcare services. In fact, the sector has not had an overwhelmingly successful big IPO in years.

Icade puts the postponement down to “volatile equity markets”. This is an ongoing worry: Antin Infrastructure took to the Euronext at the end of September, opening on a 25% premium to its top price range of €24 but has since dropped 4%.

However, the CAC index, which is the benchmark for French stocks, is down just 2% in the past month and is actually up 1% since the beginning of the week. Delegates at HBI earlier this month talk of how inflation, especially wage-related, is already baked into hospital share prices. That appears to have impacted landlords too – Icade had to set its pricing at the bottom of the range.

Four healthcare services companies have filed an intention-to-float document in the past year but just two have actually gone public. Global dialysis provider Diaverum also didn’t make it over the line, with owner Bridgepoint saying that “indications received did not fully reflect the fundamental value of the business”.

Synlab made it onto the Frankfurt Stock Exchange but market watchers are not enraptured by its performance. It too was priced low and is still only trading at a 2% premium to its opening price despite consistently delivering record growth. As Rothschild’s Hedley Goldberg said at HBI 2021 in September, Synlab “probably picked about the worst time to IPO” considering that the markets had just started to 100% discount Covid.

The investors behind Russia’s European Medical Center also sought an exit by going public on the Moscow Exchange. Despite a slow start in July, its GDRs are now up 14%.

Italian hospital group Garofalo Health Care was the last large healthcare services company to go public before the pandemic, all the way back in November 2018. It too was priced low and opened flat, but is since up 60%.

In the pipeline to go public remains Babylon, the UK-based telehealth startup that has grown revenue five-fold in H1 by shifting the majority of its operations to America. It will, “hopefully” says CEO Ali Parsa, merge with a SPAC later this month on the New York Stock Exchange.

EMC rival Medsi and Italy’s largest hospital group San Donato have also both touted going public but haven’t made significant moves.

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