Thursday, June 23, 2011

Vanguard Follows HCA as PEU IPO

Blackstone Group's Vanguard Health Systems followed KKR's HCA to the New York Stock Exchange.  Both companies own for-profit hospitals and captive insurance divisions.  Blackstone bled Vanguard and KKR/Bain Capital drained HCA for debt-funded dividends, a common private equity underwriter (PEU) move. 

Vanguard priced well below range at $18 vs. $21 to $23.  It took major discounting to entice investors.  Did dividend bleeding make up for Blackstone's 26% haircut? 

Vangiard and HCA hospitals are not considered "tax exempt facilities" under health reform.  Their PEU owners get preferred carried interest rates, at least until tax reform.