27 July 2001
Legal & General Ventures ("LGV"), one of Europe’s leading private equity firms, has acquired Craegmoor Healthcare Group ("Craegmoor") from its existing shareholders, principally Warburg Pincus. The price of the transaction has not been disclosed. NM Rothschild acted as financial adviser to the vendors of Craegmoor.
Craegmoor is the leading participant in the specialist care market, operating approximately 200 homes with an aggregate of approximately 4,800 beds across the UK. Its homes care for a range of needs including: elderly frail, elderly mentally ill, young physically disabled, learning disabilities, challenging behaviour, mental health, neurological disorders, brain injuries and children’s services.
Craegmoor was formed in 1994 through the buyout of the London Parkcare Group. Since then, it has expanded rapidly through the acquisition of a mixture of single care homes and corporate operators. Its homes are spread across the UK with a strong presence in London and the South East, Scotland, South Wales and the North.
Specialist care has and will continue to be the main growth area for Craegmoor. Increased health spending and regulatory reform, and an improved outlook for fees and occupancy result in positive prospects for the future and good quality of income. Furthermore, the market for residential specialist care is highly fragmented and this provides Craegmoor, as the leading participant, with the opportunity to grow its current business through acquisition of existing homes, development of new homes or conversion of care homes.
LGV will provide support for this continued growth through a combination of reinvestment of internally generated cash and potentially further equity if necessary and appropriate. Mezzanine debt facilities were provided to finance part of the acquisition by Mithras Investment Trust plc and Royal Bank of Scotland plc.
Commenting on the transaction, Frank Richardson, Chief Executive, Craegmoor, said:
"Considerable progress has been made and Craegmoor now ranks among the UK’s top independent healthcare providers. However, there are significant opportunities to develop the business. We look forward to working with LGV on the next stage in Craegmoor’s development." For LGV, this represents another example of its successful buy and build approach to investments that accounts for almost half of the buyouts and buy-ins it has led since 1990. It also further strengthens LGV’s track record in the healthcare sector, recently illustrated by its successful exit from Santé Finance, the French hospital group, in March 2001.
