Westminster Healthcare sold in trade sale

3i’s sale of Westminster Healthcare to a trade buyer slowed up Blackstone’s march into the sought-after sector. Barchester Healthcare, a UK nursing home operator, beat out Blackstone and three other bidders to acquire the asset for £525m. The combined company will have a total revenue of £265m and 10, 000 beds at 163 locations.

Blackstone was bidding in the wake of its £162m purchase of Southern Cross. The £11bn healthcare sector is an attractive area due to the UK’s ageing population. Private equity groups have made inroads into hospitals and nursing homes especially in recent years.

Barchester also thwarted bids from Allianz Capital Partners and Charterhouse. Allianz recently bought the Four Seasons Healthcare Group for £775m.

3i paid £267m for Westminster in April 2002. The sale generated a four-time return, an 80% IRR and a profit of £175m. “This has been an outstanding investment for 3i, backing an excellent team and a great business. We have delivered proceeds of £225m (approx €320m) to 3i and its Eurofund III investors,” said Mike Turner, who ran the deal for 3i.

Other recent realisations for 3i Eurofund III have included the IPO of E2V and the merger and refinancing of Yellow Brick Road. (See also 3i profile on page 9). 3i was advised on the deal by NM Rothschild, Lovells and PricewaterhouseCoopers. Barchester was advised by JP Morgan with debt led by RBS, Bank of Ireland, HBOS and Allied Irish Bank.