Why Ramsay investors want Thodey to split it up

Still battling a COVID hangover and the fall-out of last year’s $20 billion takeover-bid-gone-bad, a bunch of shareholders want to see Ramsay offload offshore businesses, rein in its global ambitions and refocus on its core Australian operations. It would be a big strategic shift for the country’s biggest private hospital owner, and the sort of change that does not normally happen without a fresh set of hands at the wheel. Those hands are Thodey’s, who takes the chairman’s seat following Ramsay’s annual general meeting next month.

“He has a terrific opportunity to refocus the company,” says fund manager Nathan Parkin, co-founder of Sydney-based Ethical Partners, which owns Ramsay shares.

Parkin’s plan is dramatic but simple: sell Ramsay’s Malaysian business Ramsay Sime Darby (an auction is nearly at its climax), sell or demerge its French business Ramsay Sante (one of the poison pills in last year’s failed takeover), use proceeds from divestments to reduce debt, and refocus on the core Australian private hospitals business, which is the No.1 player in the market.

Whatever happens, don’t buckle to market pressure with a deeply discounted equity raising. “A highly dilutive capital raising now would be a huge mistake,” he says.

Parkin’s comments are the polite and constructive end of the spectrum, but very much in line with other fund managers in Australia and offshore.

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