Private equity players are literally sitting on buckets of cash looking for deals and while patience is a good story for a while investors will eventually become frustrated if returns aren’t forthcoming – perhaps someone will revisit RHC, KKR bid $88 last year and today the stocks 25% lower yet clarity has returned to the post-COVID economy. The big issue with the previous KKR bid was RHC’s 52.5% position in Europe’s 2nd largest private care provider Ramsay Santé (GDS FP) – it would appear there was good reason for concern with the French listed company falling ~25% from its 2022 high but we feel some value has returned to the French business and it may be easier for a bidder to unload the more than Euro1bn stake.
However either way we like RHC at current levels even if it’s above where we exited last year. Remember what was said last year – “Your board always remains open to plans or proposals to consider that create value.” I.e. they are sellers at the correct price, in November MM said “While we think there is more to play out over time with RHC and a suitor considering the appeal of splitting the property holdings and the operating company, we think this will be a story for mid to late 2023” – time is approaching fast!
- We haven’t played RHC like a Stradivarius but we like it at current levels as private hospitals start to recover from COVID.
MM is bullish on Australian tech targeting a 10-12% upside move
