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Secondary buyout of CareTech

A GBP35 million secondary buyout backed by Barclays Private Equity has provided 3i with an exit from its investment in the care homes company. Barclays is taking a 40 per cent stake in CareTech Community Services. Royal Bank of Scotland provided debt for the new transaction. 3i invested GBP2 million in CareTech, which was an expansion stage financing in 1997, for a 27 per cent interest in the business.

The company provides residential care and support for people with learning disabilities. It operates 52 small residential care homes serving 238 residential customers and 45-day clients and generating a turnover of GBP13.4 million. CareTech was founded in 1993 and has benefited from increased demand for private sector care facilities due to Care in the Community legislation, the closure of local authority facilities and increased acceptance of privately provided care services. The company serves Hertfordshire, Barnet, Oxford, Kent, Cambridge, and Mid and South Wales.

Andrew Murtagh of Barclays Private Equity, said: “We are backing a proven incumbent team with a strong track record and have put in place significant additional funding to support their growth ambitions.” The management team, led by company founders Farouq and Haroon Sheikh, plans to expand by developing its existing portfolio, extending services and properties and through acquisitions.

Pinsent Curtis Biddle advised Barclays Private Equity, the vendors and management going forward were advised by Speechly Bircham and 3i was advised by Osbourne Clarke and Deloitte & Touche.

In July 3i sold Castlebeck Care, another regional UK provider of residential healthcare, to HgCapital also in a secondary buyout. See page 20.