One of the busiest companies on the NZX, investment company Infratil, has underlined that not all of the sharpest operators in NZ business have deserted Wellington for the brighter lights of Auckland.
This week the company announced it has executed a conditional agreement to acquire between 50.1% and 60% of Pacific Radiology Group, a comprehensive diagnostic imaging business, from its existing doctor shareholders for a total consideration of up to $350m.
Pacific Radiology is the largest private diagnostic imaging service provider in NZ, operating 46 clinics in the South Island and lower North Island and employing 90 radiologists.
The acquisition enterprise value of $867m implies an EV/EBITDA multiple of 12.6-13.3x.
Infratil chief executive Jason Boyes says the Pacific Radiology acquisition, if completed, will sit well with Infratil’s other high-performing, high-quality assets, and builds on its investment last year in Qscan Group, a leading diagnostic imaging business in Australia.
“When we outlined the company’s strategic direction in February, healthcare was identified as a sector of considerable opportunity.
“Diagnostic imaging is an essential-services industry, offering a combination of defensive characteristics and structural long-term growth. Pacific Radiology is New Zealand’s largest private provider of diagnostic imaging and has a proven track record for delivering long-term growth, both organically and via acquisition.
“We also see this as an opportunity to scale Infratil’s investment in Qscan Group and create a meaningful Australasian healthcare platform with potential synergies and adjacent opportunities.
“The purchase also confirms our continuing confidence in the NZ market and the thematics which are driving our capital allocation in communications and digital infrastructure, decarbonisation, and aging populations”.
Only in November last year Infratil’s board rejected a bid for the company from Australian Super at $7.43 a share.
Some shareholders who were dismayed the offer had been rejected (the shares at the low point in 2020 had been down about $4.40) may now be pleased at the turn of events since for Infratil.
Not only has there been the deal for Pacific Radiology, but the windpower company Tilt Renewables, 66% owned by Infratil, is being sold, with its Australian assets going into Australian ownership, and the NZ assets being taken over by Mercury. Tilt had been developed by TrustPower, 51% owned by Infratil, and its shares which had been around $3.40 in mid-2020 have risen to $7.98. So around $2bn is flowing into Infratil’s coffers from the sale.
It’s not the only positive development in recent times for Infratil. Earlier this year it reported that an independent valuation of the Australian company CDC Data Centres at December 31, 2020, indicates a significant increase in the value of its investment in CDC since September 30 2020.
“Infratil’s 48.1% investment in CDC is now valued at between A$2,039m to A$2,334m, up from A$1,597m to A$1,807m in September 30 2020”.
This increase in the valuation reflects the acceleration in demand that CDC is experiencing from new and existing customers across its portfolio, which is expected to result in its existing data centres reaching capacity earlier than expected, with a consequential effect on forecast growth.
Infratil has large shareholdings in a range of assets including Vodafone (49.9 %), Wellington Airport (66%) and Trustpower (51%) as well as assets in Australia.
So not only shareholders, but New Zealanders everywhere, should be cheering Infratil’s brilliant managers as they go about their business. And any regret that the bid for Infratil from Australian Super failed last year should have long gone. What a loss it would have been.
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