Quadrant may sell down Summerset shares

Norah Barlow, chief executive of retirement home operator Summerset. Photo / Summerset

Australian private equity company Quadrant will be able to sell down its 56 per cent stake in retirement village and aged care company Summerset from the end of this month, when a restriction of trade agreement expires.

The offer documents for Summerset's October 2011 initial public offer said Quadrant and Summerset management had entered into an escrow arrangement whereby they had undertaken to not sell their shares until the first day after Summerset's annual result for the 2012 year is released. Summerset is scheduled to release its annual result for the year to December 31 on February 25.

The possible sell-down of Summerset shares was causing some discussion in the market and its share price has been surging, albeit on light volumes.

One fund manager said he expected strong interest in Summerset, should Quadrant opt to sell "but subject to valuation, given the stock has had such a strong move".

Quadrant sold down its near 100 per cent holding in Summerset through the 2011 initial public offer.

The shares, which were issued at $1.40 each, have traded strongly since their debut on the NZX on November 1, thanks to a healthy investor appetite for exposure to the retirement village sector and the company's own strong financial performance, relative to its prospectus forecasts.

Summerset shares traded today at $2.64, near the top end of its $1.42 to $2.68 range over the last 52 weeks. The other listed participants in its sector have also performed strongly.

Market leader Ryman Healthcare last traded at $4.62, having gone through a $2.79 to $4.80 range over the last 52 weeks.

Metlifecare shares were last at $3.14, also towards the top of its $2 to $3.35 range over the last 52 weeks.

If Quadrant was inclined to sell, an underwritten and managed sale process - similar to the way that Fairfax exited its holding in Trade Me last December - was seen by market participants as being the most likely option.

Fairfax sold its 51 per cent holding in Trade Me in a process that involved UBS New Zealand buying the stock at a 5 per cent discount to the previous day's closing market price and onselling it, mostly to institutional investors.

Summerset, the country's third biggest listed retirement village operator, was once owned by AMP Capital Investors, which sold the company in 2007 after an abortive attempt to float it.

Quadrant Private Equity, with A$1.5 billion of funds under management, is one of Australia's leading private equity companies, with investments in 51 businesses across a broad spectrum of industries.