Private equity funds Brookfield and Blackstone are believed to...

Private equity funds Brookfield and Blackstone are believed to be among the parties lining up to acquire the $1 billion retirement operator Aveo that is up for sale through Bank of America Merrill Lynch.It is understood that TPG Capital may have also been in the mix during the early stages of the sale process.First round bids were due yesterday and now shortlisted parties will progress to the next stage of the competition, where they will have the opportunity to access more detailed information in a data room. Aveo has a $970 million market value. It has 93 retirement communities but only operates four aged-care facilities, so the royal commission into aged care that unfolds this year is not expected to impact the sales process to any major extent.However, a bigger challenge will be a possible class action looming over the alleged move to change the status of residents’ properties from freehold to leasehold titles.There has been scepticism about the Aveo sale process as to whether it is a price-testing exercise for 24.4 per cent shareholder Mulpha, which many say will privatise the company once the sale process is complete.Some say the Malaysian investor’s intentions remain unclear.However, in November, Aveo told the market it was encouraged by inquiries by “a significant number of parties” mostly from Asia, North America and Australia.An independent board committee has been assessing the offers and an update is expected at the company’s results on February 13.Exactly how long the private equity groups will remain in the Aveo race is unclear, as retirement assets have not typically proved a happy hunting ground for buyout funds.They are interested because Aveo’s shares look cheap after it took a battering following negative publicity about its business practices two years ago, and the suitors hope to gain control and add upside.A decade ago, the sector was right out of favour even with institutional investors who were badly burnt by investments that had soured during the global financial crisis. However, operators have gradually begun winning back support, although offloading such businesses for lucrative prices isn’t easy.Stockland also has a major stake in its $1.5bn retirement operations up for sale through Morgan Stanley and Evans Dixon, and it is understood that major Asian institutional investors such as China Investment Corporation and the Government of Singapore Investment Corporation have already shown some interest.Those parties are believed to have recently been around the market getting up to speed on the business.The sales process will get under way this month.That deal is expected to attract less opportunistic buyers, with the business widely considered a higher-quality operation, but Brookfield and Blackstone are also expected to look at the Stockland offering.Meanwhile, some say news of a sale of Healthscope to Brookfield Capital Partners may not emerge for two months, despite the private hospital operator telling the market last month that Brookfield was expected to put forward a binding bid by yesterday.Funding is in place, but the big sticking point is approval from Brookfield’s head office.Healthscope shareholder NorthWest Healthcare Properties Real Estate Investment Trust been tipped as the most likely candidate to embark on a deal with Brookfield over the property portfolio, with the Canadian pair known to have been in talks for a while.