Aus Clinical Labs lifts bonnet for IPO, investors take early look
Bank of America and Goldman Sachs have knocked together a select group of fund managers to sink their teeth into the country’s third biggest pathology play, private equity owned Australian Clinical Labs.
ACL was processing more than 90 million tests a year at its 40 accredited labs and 950 collection centres nationally by mid last year. Rohan Thomson
Fundies in Sydney and Melbourne were invited to see ACL’s sites and meet its management team in face-to-face briefings later this week, while the luckiest few also have their hands on a pathfinder prospectus outlining the business and its financial forecasts.
The early look is a clear sign that owner Crescent Capital Partners is keen to see the business listed, having pulled an earlier attempt to sell to a bigger PE firm or strategic buyer.
Australian Clinical Labs is expected to be pitched as a COVID-19 tailwinds story. The group was processing more than 90 million tests a year at its 40 accredited labs and 950 collection centres nationally by mid last year, with a focus on servicing public and private hospitals.
However, that number is likely larger now that ACL is operating COVID-19 testing clinics in NSW, Victoria, South Australia, Western Australia and the ACT.
The question for potential investors is how long the suger hit lasts.
Only pathology pure play
When Bank of America’s team started pitching potential acquirers in the second half of last year, the bankers said ACL would record $500 million revenue (including revenue from COVID-19) and earnings were pegged at more than $50 million.
IPO lead managers Bank of America and Goldman Sachs’ approach suggests an attempted cornerstone deal is in the works for the coming week or two.
If ACL hits the ASX boards, it will join a meaty Australian healthcare sector that already includes pathology bigwigs Sonic Healthcare and Healius. However, ACL would be the only pure-play Australian pathology services provider.
Crescent Capital, a mid-market Australian PE firm, bought what was hospital owner Healthscope’s Australian pathology business for $105 million to create Australian Clinical Labs in 2015.
ACL acquired St John of God Health Care’s pathology unit in October 2016 and Perth Pathology in November 2016, to add chunky Victorian and West Australian businesses to a network that already spanned Victoria, South Australia, NSW and the Northern Territory.
ACL now has more than 90 pathologists and 3500 employees on its books.
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