it was there for all to see.. afr 18 aug

Street Talk
Author: Edited byAnthony Hughes ([email protected])
Date:18/08/2006
Words:1906
Source: AFR

Plenty of PEP in talk of takeovers
Investors are witnessing a sea change in the Australian takeover scene courtesy of the private equity phenomenon, which for local chief executives means that if their share price is not going up, they are takeover fodder.
The only question is who's next? While the Coles Myer situation has been unfolding for around three weeks if the rumours are to be believed, the other strongly rumoured takeover candidate is David Vaux's DCA Group.
According to talk, the private equity bid for DCA will be at $3.10 a share. The idea seemed to be getting some momentum given DCA shares soared 18? or almost 8 per cent to $2.51 on strong volumes of more than 6 million shares.
DCA, which has an aged-care and radiology business but has hit hard times, has the distinction of being one of the few health-care stocks trading at a discount to its book value, which some estimate about $2.63.
Pacific Equity Partners, which seems to have barely stopped for breath as the leading Australia based private equity acquirer of assets and has some experience in the aged-care sector, was one name mentioned yesterday (although it was also linked up with the Coles rumours).
The locals, like PEP (though it does have an association with Bain Capital of the US), need to assert their authority as bigger rivals like Kohlberg Kravis Roberts threaten to come over the top.
As mentioned earlier this week, UBS is working on a property trust for DCA's retirement assets but its mandate is said to have been broadened.
While there is a lot of concern about the record prices being paid for assets by private equity funds, private equity can also be viewed as another way of housing assets as investors chase high returns. Because private equity fund managers are hands-on managers, they produce higher returns than vanilla fund managers, though the use of greater leverage also helps.