New Ramsay chairman David Thodey is considering winding back the clock by exiting its biggest offshore investment and repatriating that capital back to Australia.
Ramsay owns nearly 53 per cent of the Euronext Paris-listed Santè. Analysts say that stake is worth more than $2 billion. Ramsay’s decision to expand into France is a story from another era – when Australia’s domestic champions set their sights globally. It is a story of trying to capitalise on “the Ramsay Way”; a successful formula that built Australia’s No.1 private hospitals business and made investors, including its eponymous founder, rich along the way.Ramsay bought into Santè nearly 15-years ago.
Another is the structure; Ramsay owns a controlling Santè stake and has the chairman’s seat, but there is a big partner in Predica and other minority shareholders. So while the stake is big enough to be consolidated into Ramsay’s financial statements – which gives it full ownership of Santè’s problems – it cannot get the wins it needs.
That makes it harder for Santè to make money. Jarden analyst Steve Wheen, arguably the best in the sector, said: “while Ramsay had expectations that it would be less , we do not think management would have been expecting 0.3 per cent”.While Ramsay will not talk about it publicly and there is no formal end date to the review, the reality is that Ramsay’s board has until August to decide which way to go. If it hasn’t chosen by then, expect some of those shareholder frustrations to boil over.
It was significant that Thodey was announced as chairman in June, and took over from Ramsay lifer Michael Siddle in late November.At Ramsay’s result in February, the tone had changed. Ramsay CEO Craig McNally was calm and even philosophical, as were his shareholders, who liked McNally’s tightened capital management framework and more disciplined capital expenditure.Both of those are part of the Thodey effect – it did not take the former Tesltra CEO long to read the room.
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