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Summerset's Campbell sees capital structure decision in 2011

Rob Campbell, new Summerset chairman, sees capital structure decision this year

By Paul McBeth

Sept. 5 (BusinessDesk) – Retirement village operator Summerset Group Holdings’ new chairman Rob Campbell expects a new capital structure will be decided on before the year is out.

Campbell, who also chairs investment company Guinness Peat Group, has been appointed by Australian owner Quadrant Private Equity as part of its process to review the company’s capital structure. He’s been brought in to assess the options available, which include a potential listing on the stock exchange, and said it would be a “reasonable expectation” that a decision will be made this year.

“In the nature of private equity, (Quadrant is) looking for a full or partial exit in due course, and the appointment does reflect that,” Campbell told BusinessDesk. “There’s no pressure on Summerset (to make a decision), but the quality of the growth prospects mean we would want to have a pretty clear plan in place.”

Quadrant completed its full takeover of Summerset last year when the Overseas Investment Office signed off on the deal, buying the 50% it didn’t own from fund manager AMP Capital Investors New Zealand.

AMP Capital sold up after it failed to get the retirement village operator away in a public float in 2007. Quadrant came on board in 2008, investing A$90.5 million of a A$500 million private equity fund.

Campbell said Quadrant has implemented “very impressive” improvements to Summerset’s operational efficiency and capital structure, and he is confident about its future as the country’s population ages.

“The growth prospects ahead are, in fact, very good. The demographics certainly support increasing demand for both retirement villages and in the managed care end of the business,” he said. “Both are going to be very strong in the future, and it’s becoming harder and harder for the smaller players to compete in these areas.”

Summerset is New Zealand’s third-biggest retirement village operator, though it has the second-fastest pace of construction.

The retirement village operator made a loss of $1.8 million in the 2010 calendar year after booking a $5.9 million tax charge, compared to a profit of $1 million a year earlier.

Operating profit rose 8.7% to $7.5 million on a 39% surge in revenue to $34.2 million, while finance costs almost halved to $3.4 million.

Quadrant successfully floated Kathmandu Holdings on the NZX and ASX in 2009, raising A$375 million for the first float on the New Zealand exchange in 22 months, and last year bought Asia Pacific media intelligence agency Media Monitors Australia Pty.


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