Another casualty of the market collapse in aged care stocks is the expected sale of the 44 aged care home operator Allity. Discussion in financial circles is that it was planned to be placed up for sale next year – but that has now been postponed to at least 2019.
Allity is owned by the big private equity firm Archer Capital. They established Allity in 2013 when Archer purchased 30 care facilities from Lendlease for $270M. They were part of the Babcock & Brown portfolio that Lendlease had acquired after the GFC meltdown.
Private equity firms traditionally like to ‘pump up the income and dump’ acquisition within three years.
Archer missed its chance last year. It was exactly 12 months ago that Estia was pressing Archer to sell Allity to them. The aged care market was red hot with Estia near its peak share value – it has since dropped by 60%.
Allity would have been worth up to $1 billion but now the figure would be around half that – if there were willing buyers with a lazy $500M.
To get that price again it will have to prove it has stable, long term income – something the whole sector needs badly.