The private equity group, CVC Capital Partners, which majority owns Spain’s largest hospital chain, Quiron Salud, plans to hive off its 50 or so hospitals into a separate company. It then wants to sell 49% of the propco equity. We look at what it will fetch and why it adopted this approach. The deal if it comes off will be by far the largest property transaction in private healthcare in Spain.
We hear that this structure has been chosen to avoid paying VAT on the rent. The Spanish press reckons the property portfolio in its entirety is worth €600m.
Stéphane Pichon, managing partner at Your Care Consult, said: “IDC has had difficulties relating to VAT exemptions. It would have had to pay VAT on the rent, if it had gone down the sale-and-leaseback route, and it couldn’t recoup it. For a hospital group, the rent is the second biggest cost. It has been trying to find a way around the problem since the beginning of the year, unsuccessfully”
Pichon also said that a similar problem exists in Italy, but people have been able to get around it
The JV option, however, will put off some investors.
“The liquidity is much less than with a sale-and-leaseback deal, as Quiron keeps the majority stake. That will reduce the level of interest in this deal to a fairly small group of investors”.
CVC owns 61% of IDC and was rumoured to be looking at an IPO. This deal will release capital from the group, but wouldn’t stop a future IPO, according to Pichon.
Source: Healthcare Europa, 23dec15