Three bids for Estia Health, but Bain leans toward relisting

Just over two years after acquiring Estia Health for $838 million, Bain Capital has reportedly received bids of up to $2.7 billion for the aged care operator.

Opal HealthCare, Australia’s largest aged care operator, has offered about $2.4 billion for 100% of Estia, according to The Australian Financial Review.

US investor Stonepeak, Aura Holdings’ new financial partner, has put forward a slightly higher bid at $2.5 billion, with Regis offering $2.2 billion. The AFR has reported there was interest up to the $2.7 billion mark.

However, US-based Bain, which is being advised by Barrenjoey, Morgan Stanley, UBS, and Reunion Capital Partners, is eyeing $3 billion, and an IPO remains its preferred option. Under the IPO option, Bain would look to raise $1 billion, retaining a 50% stake in the aged care operator.

Since Bain acquired Estia Health in December 2023, the operator has grown from 75 homes (6,720 beds) in 2023 to 94 homes (9,250 beds) today. The operator has acquired Vacenti Aged Care’s seven homes in Brisbane, Mark Moran Group’s Little Bay and Warrawee homes, and Aurrum Aged Care’s seven aged care homes. The group has also lifted occupancy, increased accommodation prices, and centralised admin and procurement.

Estia reported revenue of $1.3 billion revenue in the year to 31 December, a 71% increase from the $765 million revenue reported in FY23, before the company was delisted from the ASX. Adjusted earnings have climbed to $176 million from $116 million.

The mooted sale of Estia comes at a markedly different time for the aged care sector than when Bain acquired the operator, in the shadow of the COVID-19 pandemic and the Royal Commission into Aged Care Quality and Safety.

The sector has been supported by regulatory stability under the new Aged Care Act, improved funding and the long-term tailwinds of an ageing population – though the war in the Middle East has added fresh uncertainty, and adverse media attention has resurfaced.