Spire IPO: Healthcare company aims at expansion

By: Michael Kamberov
Michael Kamberov
Kamberov joined us to improve his ability to report the financial markets and learn about business. He now heads… read more.
on Jun 26, 2014
Updated: Apr 9, 2020

iNVEZZ.com, Thursday, June 26: The private equity-backed group, which owns and operates the nation’s second-largest network of private hospitals will become the UK’s first listed hospital chain.

Spire is to list its shares on the London Stock Exchange, aiming to raise £315 million to cut debt and finance its expansion goals. With a current estimated value of about £1 billion, excluding borrowings, the firm will have debt of about £500 million after the initial public offering (IPO), according to inside sources.
The Times reports that the private hospital group is aiming to have a free float of at least 25 percent of its equity. Spire also plans to use the listing to offer shares to its staff and freelance medical consultants. The group will be the only private hospital operator listed on the London Stock Exchange. The IPO is planned to take place in mid-July.

**IPO outlook**
The float is expected to be one of the last before the traditionally quiet summer period. Proceeds from UK listings have more than tripled this year but the market has seen some disappointing performances. The over 50s insurer Saga (LON: SAGA) suffered a significant fall in its share price in the days following the IPO. (AA IPO: Shares fall in a disappointing debut) Some critics are sceptical about the chances of a successful IPO for Spire due to institutional investors’ fading appetite for flotations.

By contrast, Spire CEO Rob Roger is quite optimistic about their plans. “We will be a unique stock coming to the market – we will be the only private hospital provider in the FTSE 250,” he said.
“We believe that the offer will position the group for its next stage of growth and development,” Roger said during a telephone interview with journalists. “Most importantly, being listed will enable the future access to the capital markets when we need it for future growth,” he added.

Roger said that he couldn’t disclose the number of shares which are going to be offered but he confirmed that Cinven would retain a substantial stake in the company. A prospectus is expected to be filed by early July. JPMorgan Chase & Co., Morgan Stanley and Bank of America Merrill Lynch are coordinating the sale with Numis Securities Ltd as co-lead manager. According to data compiled by Bloomberg, the listing will be the largest UK health-care IPO since 1993.

Spire aims to gain enough capital to invest in expanding its hospital portfolio. According to Roger, the group is planning two new regional hospitals by 2017 and another two in London further in the future, as well as four more radiotherapy centers.
“We will continue to invest in our existing infrastructure by adding new theatres and diagnostics such as services in cardiology,” he said. “We also plan to build new sites.” Roger noted that Spire has been working on its IPO plans for two years and has held preliminary talks with potential institutional investors.
A specialist in knee and hip replacement operations, Britain’s second largest private hospital chain was founded in 2007 when Cinven bought 25 hospitals from Bupa. Spire currently owns 39 private hospitals and 13 clinics in the UK. Spire’s hospitals also provide specialist treatment in orthopedics, gynecology, cardiology, neurology and oncology. Last year, the group generated revenue of £764.5 million and earnings of £209 million. More than half of Spire’s revenue comes from private medical insurance.

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