3i sells Westminster

Barchester has won the hotly-contested bid for 3i’s Westminster Health Care in a £525m transaction. The combined business will have a total revenue of £265m this year with 10,000 beds in 163 locations.

The transaction returns four times the original investment to 3i, delivering proceeds of £225m to the group and its Eurofund III investors and an IRR of over 80%. 3i led the £267m buyout of Westminster in 2002, backing Tony Heywood as chief executive and introducing Nick Irens as chairman. 3i was advised on the deal by N M Rothschild, Lovells and PricewaterhouseCoopers. Other recent successful realisations for 3i have included the IPO of E2V and the merger and refinancing of Yellow Brick Road.

Westminster Health Care operates 5,680 beds at 88 care homes – 63 in England, 17 in Scotland and 8 in Wales. It offers a range of general and specialist services including care for patients with dementia and respite care. Many of its beds are privately paid for or attract premium fees from social services or the National Health Services.

Barchester Healthcare has 4,324 beds at 75 care homes and retirement villages in England and one in Scotland, offering private and public pay services, including accommodation for people with learning difficulties, younger disabled, sufferers from dementia and the semi-independent elderly. Barchester homes have 24 hour nursing and residential care and operate in the premium sector, the majority of beds are privately paid for or are aimed at premium fees from Primary Care Trusts and Social Services.

The care services space is attracting continued interest from the private equity community as consolidation in the sector continues to spin-out opportunities for both investment and divestment, as Blackstone’s recent secondary buyout of Southern Cross Healthcare from West Private Equity illustrates. For more on the care services sector – see News Analysis, EVCJ November.