Healthscope to stay private if Brookfield bid succeeds
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Healthscope to stay private if Brookfield bid succeeds

Brookfield Asset Management said Healthscope might never return to public ownership if its takeover bid for the private hospital operator succeeds.

“We’ve been owner operators for over 100 years,” said Brookfield’s head of private equity Len Chersky.

“We’re a long-term patient investor and when you look at it on a 10-year basis, the tailwinds are undeniable,” he said with reference to the long-term opportunity of a growing and ageing population.

The long-term view means that Brookfield is less concerned than the sharemarket by short-term volatility from issues like Labor's plans to cap health insurance premium rises.

Brookfield Asia Pacific CEO Stewart Upson and Len Chersky, managing partner in Brookfield's Private Equity Group.

Brookfield Asia Pacific CEO Stewart Upson and Len Chersky, managing partner in Brookfield's Private Equity Group.Credit:Peter Braig

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"We see that has short-term noise and take the long-term view and don’t really get too concerned about that,” said Stewart Upson who heads Brookfield's Asia Pacific operations.

The Canadian group does not expect to have to wait long for a return on its $4.4 billion takeover offer which has the support of Healthscope’s board.

“There’s already substantial embedded growth because the company has already spent a billion dollars over the last three years,” said Mr Chersky. These were investment projects instigated by Paula Dwyer’s Healthscope board after the company was returned to public ownership in 2014.

It is one of the reasons why some analysts viewed the original $4.2 billion offer for Healthscope, from BGH Capital, as opportunistic when it re-emerged as a suitor last October.

Morgan Stanley said the Healthscope business had been “starved of investment” under its previous private equity owners, TPG and Carlyle, and “investors have effectively funded a catch-up period of expansion capex” that would now dip markedly.

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This is not the plan for Brookfield though, with Mr Chersky saying the group sees a lot of opportunity to invest "whether it be expanding into some of their high growth catchment areas or bolting on additional hospitals or on adjacent opportunities”.

Sharemarket investors have been mulling over the intriguing possibilities that could open up if Brookfield pursued "adjacent opportunities" like the acquisition of ASX-listed Healius.

Mr Chersky declined to comment on any plans on this front, but he did say that public targets are not the preferred option.

"Public market transactions are more complicated to execute, but the fact remains that in certain sectors, and healthcare is certainly one, if you want the great platform they exist in the listed space so you have to look into the listed space,” he said.

Colin Kruger is a business reporter. He joined the Sydney Morning Herald in 1999 as its technology editor. Other roles have included the Herald's deputy business editor and online business editor.

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