In Asian M&A news this week, IHH Healthcare, Asia’s largest hospital operator, was reported to be mulling a USD 4.5 billion bid for Australia’s Healthscope, also a hospital operator, according to Bloomberg. Healthcare investment is up and coming, particularly in the US. Dealogic reports that its data revealed that healthcare was the third most active in segment in its 2013 global M&A studies. Only Telecomm and Real Estate saw more activity.
More proof was published by WSJ Private Equity Beat blog which discusses the trends in the latest deals, saying that a USD 500 valuation for information technology company Ability Network “is an indication of how hot it’s getting in the health-care market”. The valuation is 17 times earnings before interest, taxes, depreciation and amortization while the valuation multiple for health-care information technology deals is typically in the 10 to 12 times EBITDA range, says the report.
One driver of the valuation jump is that private equity and strategic acquirers are now competing amongst themselves for targets. Another driver is climbing stock market values, which affect both the selling and buying prices. There has been a 36% jump in one of S&P’s healthcare stocks indices in the past year.