Healthy profits for Blackstone

Blackstone’s UK care homes operator, Southern Cross Healthcare has raised around £200m in its IPO on the London Stock Exchange. The initial public offering (IPO) price of 225 pence per share gave Southern Cross a market value of £423m.

Southern Cross was originally rumoured to float in June and raise around £500m, but those plans were put on hold due to turbulent stock markets.

Chief executive Philip Scott said: “We are delighted to have completed the IPO, particularly in light of the volatile market conditions in recent weeks.”

The company sold 88.9 million shares at 225 pence each, raising around £175m pounds for the company to reduce its debts and around £23m for selling shareholder Blackstone, which is reducing its holding in the business from 88% to 48%.

Blackstone acquired Southern Cross Healthcare in a secondary buyout transaction from West Private Equity for £162m in September 2004.

In November 2005, the business completed the acquisition of the leasehold interest of the Ashbourne Group of care homes. Totalling around 10,000 beds in 193 homes, this acquisition added significantly to the Southern Cross Group. The enlarged company now operates some 573 care homes providing 28,000 beds with further growth anticipated in the elderly and specialist care divisions. Southern Cross is now the largest national provider of long term care services.

West Private Equity acquired Southern Cross with co-investing partners and management in August 2002 for £80m, comprising £35m equity and £45m debt financing. At the time, the business operated 139 care homes with 7,600 beds in the UK.