HBI Deals+Insights / White Paper

Who is raising money?


Making sense of the money markets isn’t easy right now. But some big players – Ramsay, Zur Rose and TPG are still raising money and some sectors such as German outpatient are still seeing M&A consolidation.

The money is still there for strong, stable players. Witness TPG’s acquisition in Mid-April of a stake in Lifestance, a big US player in psychiatry valued the company at $1.2bn, Ramsay’s recent equity raising and the way Zur Rose, the online pharmacy group has managed to raise SF175m on a convertible bond paying 2.75% through UBS, a deal which was many times oversubscribed.

Meanwhile, Synlab is refinancing by pushing out the maturities on loans and bonds originally due 2022 by two years. It’s asked bondholders of the €920m note, originally placed in 2016, to exchange for a new term loan B expiring in July 2024 alongside asking other debt holders to extend maturities by other methods. It has set deadline for the new commitments for May 11th.

Eurofins has also raised €600m through a new bond that matures in 6.2 years with an annual fixed rate of 3.875%. The company said it was more than 2x oversubscribed. “The purpose of this refinancing exercise is to increase the average maturity of Eurofins’ debt instruments and to proactively manage the refinancing of its EUR 500m Bonds due 27 January 2022 and its EUR 500M Bonds due 30 January 2023 that are currently under tender offers, for which results are expected to be announced on 14 May 2020,” the company said.

On April 22, Australia, Southeast Asia and European hospital operator Ramsay Health Care raised AU$1.2bn (€720m) by issuing 21.4 million new shares at AU$56 each, a 12.9% discount to the previous day’s closing price. The capital would be used to shore up Ramsay’s balance sheet and partially repay revolving debt facilities. San Donato has also raised a new loan to finance the construction of a new hospital.

Korian issued a new €400m seven-year convertible bond at the beginning of March, which at the time said it would be used for financing general corporate needs including growth, real estate investments, acquisitions and the refinancing of acquisitions carried out during Q1.

That these groups have managed to raise money is not surprising. Research by consultancy Oliver Wyman shows European healthcare stocks have fared much better than other sectors.

The capital markets have also been tapped for more philanthropic purposes. Spanish insurance company MAPFRE has issued a €50m ‘social’ bond to help finance Madrid’s hospitals in the front-line fight against COVID-19, promising a 3% yield and three-year maturity.

But money may become scarcer. We hear that JP Morgan has stopped offering buyers of assets it is selling staple finance – the corporate equivalent of hire purchase. Big banks like JP Morgan are also seeing corporate borrowers with revolving credit facilities immediately drawing down all their allowed money. That can suck up hundreds of billions of cash.

Our Analysis: So far as we reported last week it is the case that lenders give preference to the health care services sector. But that may start to change. They may be overly optimistic in assumptions about how fast demand will bounce back. And the political landscape is changing against for-profit health care services. The next five years will see massive consolidation but it won’t be an easy ride for anyone.

We would welcome your thoughts on this story. Email your views to Rachel Lewis or call 0207 183 3779.