Australian investment and banking giant Macquarie has made its first foray into the New Zealand rest-home sector, buying up Abano's ElderCare business for $63.5 million.
ElderCare is now out of the "aged-care" business, left with money to spend on its new ventures in less capital-intensive businesses such as healthcare and
medical services.
Company shareholders, including Eric Watson's Cullen Investments, are in line for a $10.5 million capital return as a result of the sale, which is still conditional on approval from shareholders and the Overseas Investment Commission.
News of the sale sent Abano's share price soaring 34 per cent, ending the day at $1.58, up 40c.
The company has been looking to get out of the rest-home business for some time, last year appointing investment bank Clavell Capital to review its operations.
Macquarie, which has bought a big rest-home operation in Canada and another in Australia, was invited as part of this review to do due diligence on ElderCare's portfolio of 13 New Zealand facilities.
Abano chairman Jim Syme said yesterday the aged-care sector was better suited for bigger, better-resourced companies such as Macquarie.
"ElderCare has been a cornerstone business for the group and has provided a platform for our evolvement into the wider medical and healthcare markets," he said.
"However, we believe the future of the aged-care industry in New Zealand lies with substantial organisations who have a lower cost of capital and who are able to spread administrative costs and achieve the required economies of scale."
Syme said the sector was capital intensive and the company would be required to spend a lot on maintenance and upgrades of its homes and to buy new ones.
In care
ElderCare New Zealand is the aged care operation of listed company Abano.
It runs 13 residential care facilities. With 634 staff, it operates 740 beds, 69 independent retirement villas and 35 serviced apartments - 2.4 per cent of the national market.
