Appetite for healthcare continues

Healthcare deals continue to attract private equity buyers and high prices as the latest mega deal in this space proves. BC Partners has sold General Healthcare Group (GHG) in a tertiary buyout transaction to Network Healthcare Holdings, a consortium including three leading UK-based financial and property investors, including Apax Partners, London and Regional Properties and Brockton Capital LLP. The business boasts a £2.2bn price tag.

South African-based Network Healthcare Holdings Limited is listed on the Johannesburg Securities Exchange (JSE) and is the largest, integrated private healthcare organisation in Southern Africa. Netcare owns, manages and has interests in 71 hospitals and same-day surgical units comprising 9,285 beds, 358 operating theatres, 82 pharmacies and 61 specialised medical centres; and is supported by more than 2,500 medical specialists.

The consortium will acquire 100% of GHG. Netcare will own 50.1% of GHG in return for an investment of approximately £217m, along with the injection of its wholly owned UK subsidiary Netcare Healthcare UK Limited (“Netcare UK”). The £217m will be funded using new debt facilities provided by Dresdner Bank AG that have been raised for the purposes of this acquisition. The balance of the purchase price will be provided by the consortium partners and debt financing.

BC Partners acquired GHG in September 2000 in a £1.275bn secondary buyout transaction from Cinven. Cinven acquired Compagnie Generale de Santé, a business comprising General Healthcare, then the second largest private hospital provider in the UK and Generale de Sante, the leading private healthcare provider in France in July 1997 at a cost of £580m. These businesses were immediately separated and were managed independently. In December 1997, Cinven merged General Healthcare and Amicus under the General Healthcare name to create the largest private hospital operator in the UK. And in July 2001 Cinven successfully floated Generale de Santé on the premier marche of Euronext in Paris in July 2001.

With a national network of 49 hospitals and approximately 2,400 beds, GHG is a leading provider of private acute care in the UK. The Group’s facilities and doctor base enables the company to offer a comprehensive range of medical and surgical services. With the current combined earnings of the two companies, Netcare’s turnover is set to increase by at least 87%, while the combined portfolio of hospitals and ambulatory day care centres will stand at 120, with a total of over 11,500 hospital beds.