UK private equity firms 3i and ECI Partners have been linked with the acquisition of an estimated £1.25bn of NHS contracts to run primary healthcare centres.
3i, ECI Partners and Merrill Lynch Private Equity were named in one consortium, while Alliance Boots, owned by US private equity firm Kohlberg Kravis Roberts, has been confirmed as a bidder, as it looks to enter the primary care market.
The contracts will be awarded by the end of the year through the government’s Alternative Provider of Medical Services initiative.
In February, MLPE bought Integrated Dental Holdings, a UK owner of dental practices, for a reported £300m. MLPE was its third private equity owner to date, having previously operated under LGV Capital, the private equity arm of UK insurer Legal & General, which bought the business from Risk Capital Partners for approximately £100m in April 2006.
At the time of the acquisition, IDH said it was committed to the NHS and working with primary care trusts and local health boards.
Also in February, 3i bought Ultralase, a UK ophthalmic treatment business, for £174.5m as well as Norwegian antibiotics supplier Active Pharmaceutical Ingredients for US$395m. In July, it acquired a minority stake in Labco, a pan-European medical diagnostics business, for €140m. Other healthcare investments include Quintiles, in which it acquired a minority stake alongside Bain Capital, TPG Capital and Temasek in December of last year.
ECI’s healthcare deals include Benchmark Dental Laboratory, a dental laboratories holding business; Clinisys, a healthcare software provider, bought for £61m in April 2007; and WCI Group, which comprises a management consulting and technology services group which has contracts with the NHS and pharmaceutical firms, and Harmoni, an out-of-hours and other primary care services provider.
Another private equity firm to have entered the sector this year was RJD Partners, which invested £6.1m of development capital in Raphael Healthcare, a provider of specialist mental health services for women, in a deal that valued the business at £30m. The business, founded by former NHS Trust director of mental health Arthur Robinson, operates a 41 bed hospital in Nottinghamshire and is a preferred supplier to primary care trusts in the east Midlands, west Midlands and the south west.