KKR to Invest in Healthcare Specialist Genesis Care

 Article June 27, 2012, 9:38 AM By David Winning KKR & Co. is poised to invest in closely held Genesis Care, which provides services to patients with cancer and cardiovascular disease at public hospitals and private clinics in Australia, two people familiar with the matter told Deal Journal Australia. The move is the latest by KKR and rival private equity firms like TPG Inc. and Carlyle Group to capitalize on rising demand for healthcare services in the Asia-Pacific region, especially in Australia where the World Health Organization forecasts the number of people aged 65 or more will nearly triple by 2050. Sydney-based Genesis Care was founded about seven years ago and has grown into a business with 1,000 employees and 75 facilities across Australia providing radiotherapy treatment to cancer patients and cardiovascular care. Teaming up with KKR opens up the potential for Genesis Care to expand in areas of Australia where it doesn't have a big presence, perhaps partnering with more state governments following a landmark agreement with Western Australia early last year to provide cancer care services in some public hospitals.

Associated Press A patient is prepared for daily radiation treatment It could also enable Genesis Care to offer new services to patients, such as dialysis. In recent years, the company has added sleep medicine and treatments for related respiratory illnesses to its cardiovascular services, and medical oncology – such as chemotherapy – to its cancer clinics. UBS AG advised Genesis Care, which had earnings before interest, tax, depreciation and amortization of 60 million Australian dollars (US$60.3 million) in the most recent fiscal year. Record Point provided financial advice to KKR. The deal was agreed at a multiple of around 10 times forward earnings and KKR will take a stake of more than 60%, one of the persons said. Healthcare has proved to be a bright spot for private equity, which has struggled to complete deals in other sectors like retail in recent months. In 2010, TPG Inc. and Carlyle Group acquired hospital operator Healthscope in a deal that valued the company at A$2.7 billion dollars. That was followed by Archer Capital's purchase of private hospital operator Healthe Care last year. Driving these deals is the increasing sums that Australians require to stay healthy. According to March figures from the Australian government, real total health spending per capita was A$5,479 in the 2009-2010 fiscal year, up from A$4,710 just four years earlier. Moreover, citizens aged over 65 spend more on their health than those in their twenties. That's significant as the World Health Organization predicts the number of Australians aged 65 years or more will increase from 3 million in 2010 to 8.1 million in 2050, when they will represent just under a quarter of the total population. The burden of rising healthcare costs is prompting many Western governments to seek more help from private operators. This move toward outsourcing services mirrors public-private partnerships in prisons, toll roads, and other key infrastructure. Genesis Care's agreement with Western Australia included a joint commitment to invest up to A$200 million to expand radiotherapy services, including in the Royal Perth Hospital and the South West Health Campus in Bunbury. Outreach clinics were also set up to boost access to care in rural regions of Western Australia. Private healthcare providers say patients using their facilities benefit from accessing treatment faster than if they solely relied on state-provided care. This includes being assessed by a team of specialists, rather than a patient having to book separate appointments at different times. In April, KKR said it will invest US$65 million in China Cord Blood Corp., an operator of services for umbilical cord blood that is rich in stem cells, to capitalize on China's fast-growing health-care services industry.