AlternativesAugust 13, 2020

NZ Super Fund, Ontario Teachers’ Buy Australian Pathology Firm

The pension funds are each taking a 50% stake in Asia Pacific Healthcare Group in a $362 million sale.

Reported by Sarah Min

The New Zealand Superannuation Fund and the Ontario Teachers’ Pension Plan (OTPP) Board bought a pathology business this month in a $362 million sale. This marks a major pension push into the health industry, with a company that is at the center of the fight against the coronavirus.

The pension funds will each take a 50% stake in Asia Pacific Healthcare Group (APHG), the largest New Zealand pathology business under Healthscope, Australia’s largest private health care operator, according to a release.

APHG, which provides services to three-quarters of New Zealand’s population, has been “heavily involved” in the country’s coronavirus response, according to the release. New Zealand has been praised for its handling of the pandemic, though it reported four new COVID-19 cases this week after more than three months without one.

“Never has the value of excellent health care and pathology services been more apparent than in the ongoing COVID-19 crisis,” NZ Super Fund Chief Investment Officer Stephen Gilmore said in a statement.

“We’re pleased to return this asset to part local ownership and continue our strong investment into New Zealand,” Gilmore continued. About NZ$6 billion of the NZ$46 billion fund, or US$4 billion of the US$30.3 billion, is invested locally.

Healthscope, which started searching for prospective buyers at the start of the year, said the sale is consistent with its “long-term strategic refocus” on its hospital divisions in Australia.

For Ontario Teachers, the acquisition is in line with other recent health care investments the C$207.4 billion fund has made. About 11% of its C$39.3 billion, or US$29.7 billion, private equity portfolio is invested in health care. In 2019, the OTPP led a C$140 million, or US$106 million, fundraising round into Swedish digital health care provider KRY International that allows consumers to see doctors through their smartphones.

The transaction is expected to close by February 2021, pending approval from New Zealand’s Overseas Investment Office.