Spire Healthcare drops after owner Cinven sells down stake

14th Apr 2015 15:28

UK hospital operator Spire Healthcare dropped sharply after private equity group Cinven sold down its stake to 38.3% with a £136m share sale not long after the company released encouraging maiden results.Cinven's broker JP Morgan raised £136.4m by selling 40.1m shares at 340p each, a fair discount to Monday's closing price of 367p.To console investors, the private equity group, which floated Spire at 210p a share last July, has agreed not to sell any more shares for 90 days.Spire, which last year generated more than 29% of its revenues from the UK National Health Service, is expected to gain from further privatisation of the NHS, which even the Labour party's general election manifesto on Monday applauded as a break with its previous rejection of markets and competition in health care.But analysts at Numis recently downgraded Spire due to a predicted slower ramp-up of private medical insurance revenues in 2016 and more rapid growth capital expenditure deployment. Broker Investec agreed capex requirements of circa £125m were higher than it expected and said there was "little in the statement to support recent strong share price momentum".Last year Spire opened its first radiotherapy centre in Bristol in 2014, acquired St. Anthony's Hospital in Cheam and received planning consent to open new hospitals in Manchester and Nottingham as well as a radiotherapy centre in Chelmsford, Essex.Despite profits being hurt by a reduction of NHS tariffs hitting profits, chief executive Rob Roger said Spire was "ideally positioned" for its next phase of development."We are well capitalised and ready to capture a growing share of the UK's expanding independent healthcare market and provide much needed additional capacity in areas such as radiotherapy and cancer care."