Covenant secondary buyout

Phoenix Equity Partners has sold Covenant Healthcare to Electra Partners Europe for £170m. Phoenix Equity Partners established Covenant Healthcare in 2002 with healthcare entrepreneur Dr Ishak, using it as a platform to build a UK hospitals group. The business specialises in elective surgery and psychiatric care.

Acquisitions included Abby Hospitals in June 2002 for £25m, Gainsborough Hospital in February 2003 for €15m and Transform Medical in October 2002 for an undisclosed amount.

Transform is the largest part of the Covenant Healthcare group and is poised to access the growth in both the surgical and non-surgical cosmetic markets in the UK. Currently, Covenant Healthcare undertakes over 15,000 surgical and non-surgical procedures a year.

Covenant Healthcare’s revenues and profits have grown by 2x and 3x, respectively, during 2002 to 2005, and in so doing has realised Phoenix Equity Partners £67.5m, or 6.2x cost and 100% IRR on its investment.