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3i sells Castlebeck to HGCapital

In a secondary buyout HgCapital has taken control of Castlebeck Care, a healthcare company previously backed by 3i. Three-and-a-half years ago 3i invested GBP5 million in the business for a stake of around 50 per cent. Brian Stevens and Kevin Davis, who were part of the team that founded the company in 1988 and were backed in 3i’s deal, have also realised their investment through the sale of the business, reported to be worth between GBP45 million and GBP55 million. After a hand-over period they, and Bob Oreschnick, the company chairman introduced by 3i, will leave Castlebeck. Leeds-based 3i director Andrew Garside said Castlebeck had returned a significant profit, multiplying the money invested by 3i several times.

Castlebeck Care provides residential healthcare at 10 facilities in Scotland and the North East of England for adults with learning difficulties and challenging behaviour. Since the first buyout the company’s turnover has doubled from GBP4.9 million to GBP10 million. When 3i invested, the business had 89 beds in five sites. It now has 166 beds in 10 sites.

A debt package including mezzanine has been provided by Bank of Scotland Structured Finance, which also helped finance the original deal. Four members of the existing management team are investing alongside HgCapital and the new CEO Chris Sandham, a buy-in candidate and previously CEO of HgCapital investment, Priory Healthcare. Healthcare is one of four industry sectors that HgCapital focuses on. Deloitte & Touche Corporate Finance and Dickinson Dees, who both advised on the original deal, repeated their roles.