The UK’s second biggest private hospital chain Spire Healthcare set a 210p to 300p per share price range yesterday on its looming stock debut.
The group, made up of 39 private hospitals and 13 clinics, is hoping to raise £315m from investors in the share issue to cut debts and provide an exit route for private equity backer Cinven.
“We are pleased with the level of investor interest we’re seeing at this stage of the IPO process,” chief executive Rob Roger said.
Nearly £60m of the money raised will go on fees for bank advisers and bonuses for Spire staff, with the other £255m going to the company.
A float of the company at the bottom end of the range would give the group a market cap of about £850m, putting it in the FTSE 250.
The company, which is set to hand up to 45 per cent of shares to investors, has been touring City fund managers to drum up interest ahead of a pricing late next week.
However, doubts were raised yesterday about future risks to the business after Spire flagged contract renegotiations with Bupa as a threat to future earnings.
Both sides are currently holding talks about renegotiating contracts which expire 31 March 2015 but Bupa is demanding fees cut of up to 15 per cent from private hospitals like Spire.
Spire said a reduction in pricing terms could have a “significant adverse effect on the group’s revenue or profit derived from Bupa-funded patients” if it could not secure the similar terms.
Bupa is the group’s biggest source of private medical insurance revenue, which itself accounts for 54.4 per cent of total revenue.
People close to the company downplayed the threat and said Spire had “good relations” with Bupa.