Healthcare

San Donato group ready to divest 20%: stock market option

Exploratory mandate to Morgan Stanley to study different options. A minority partner could be considered as an alternative to the IPO

by Carlo Festa

9 January 2024

3' min read

Key points

Numbers
The structure
International expansion

3' min read

The Rotelli family entrusted an exploratory mandate to the investment bank Morgan Stanley to evaluate the valorisation of a 20% stake in the San Donato group (owner of world-class facilities such as the San Raffaele hospital, the Policlinico San Donato and the Galeazzi hospital) through sale to a partner or by listing on the Milan Stock Exchange.

According to rumours in Il Sole 24 Ore, the plan for the further development, in Italy and abroad, of the Italian private healthcare giant has been defined in recent weeks. The American investment bank Morgan Stanley was chosen as financial advisor, to assess the next steps to be taken.

The numbers

The San Donato group is a leader in Italian healthcare with 5.4 million patients treated in the last year, in 54 healthcare facilities (including 18 hospitals) with three IRCCS (Policlinico San Donato, Ospedale San Raffaele, Ospedale Galeazzi-Sant'Ambrogio), with more than 7,000 doctors, 5,566 beds and a total of 18,240 employees. The sale of a 20% stake to a minority shareholder, probably a private equity fund, is one of the options, as is the company's IPO. Last July, the San Donato group presented its new corporate structure and development plans. The path undertaken three years ago to streamline and reorganise the corporate structure has thus come to an end.

The structure

Velca, chaired by Angelino Alfano and with vice-chairmen Kamel Ghribi and Paolo Rotelli, 100% owned by Papiniano Spa, has become the holding company to which all operating companies will report, with a future role of management and coordination, to face an increasingly broad and complex market in a more homogeneous manner.

Subsequently, the name of the holding company changed from Velca to San Donato Group. The internal governance was also enriched with an advisory body: the new ethics and legal advisory committee was created, with cross competences across all operating companies. The committee is chaired by Giovanni Salvi, former Attorney General of the Court of Cassation.

International Expansion

Then there is the chapter on international expansion. The San Donato group's presence has been consolidated in the Middle East and North Africa area, in Egypt, Saudi Arabia, Tunisia, and in countries such as Iraq and Libya, an opportunity that represents the new frontier for Italian healthcare, to build and manage new hospitals by exporting Italian know-how and to enter into agreements for the management of foreign patients. In December, the acquisition of a majority stake in American Heart of Poland, the largest independent cardiovascular care provider in Europe and one of the three largest private healthcare providers in Poland, was announced in partnership with GKSD Investment Holding.

Through this transaction, the Rotelli family company consolidated its position among Europe's largest healthcare groups. It was the first major international acquisition by the group and a further building block for its growth. With this acquisition, the European leader in the treatment of cardiovascular diseases was born.

With the new company structure and the strategy to develop abroad, the listing or sale of a minority stake therefore becomes a crucial step, following the record results of 2022. Consolidated turnover amounted to approximately EUR 1.88 billion, an increase of about 7% compared to last year (about EUR 1.76 billion in 2021), reflecting the recovery of the healthcare business with the resolution of the pandemic (net of Covid reimbursements, the value of revenues grew by more than 11% in 2022). The cost of production increased more than proportionally to the increase in revenue, resulting in a slight decrease in EBITDA of about EUR 10m (EUR 155m in 2022 compared to EUR 165m in 2021).