Legal & General Ventures (LGV), the captive firm of the UK insurance giant, has long had significant interests in the healthcare sector, including forensic services company LGC, residential care company Craegmoor Healthcare, and medical manufacturing company Verna Group. Now it's gone one step further and acquired the real estate necessary to create its own private hospital chain.
The firm acquired a portfolio of nine hospitals from UK private healthcare company BUPA in a deal valued at £85 million (€123 million; $148 million). The hospitals, which contain more than 300 beds and are staffed by over 2,000 employees, are located across England in towns including Reading, Blackpool, Hull and Halifax.
Michael O'Donnell, a managing director with the firm, explains why the acquisition appealed to the firm: “We like the fundamentals of the healthcare sector, and we like assetbacked deals,” he said. “We've been looking at private hospitals for a while, and we felt this portfolio would make a very good platform.”
“We like the fundamentals of the healthcare sector, and we like assetbacked deals.”
The assets will be operated by a newly formed company, Classic Hospitals, which will be the UK's fifth largest group of private hospitals. The firm hopes to build on the services provided by BUPA, and has stated its commitment to invest in refurbishing the hospitals' facilities. However, the company's head office, in the Dunedin Hospital in Reading, will not dictate a program of development.
“We're going to run it like nine small businesses, and give local management free reign,” said O'Donnell. “If they think it's possible, for example, to grow the MRI scanning unit, we'll encourage that.”
He added that LGV is considering making further acquisitions to add to the chain. However, he emphasized that such a move is not required in the firm's core business plan.
Halifax Bank of Scotland plc and the Quercus Property Fund arranged financing for the deal.
LGV is a London-based mid-market private equity firm with an investment focus on MBOs and MBIs of businesses with an enterprise value of more than £60 million. In July 2004, the firm announced the closing of their fourth fund on over £180 million.
Starwood acquires hospitality group
Starwood Capital Group, the Greenwich, Connecticut-based opportunity fund manager, has paid €2 billion ($2.4 billion) to acquire the Rheims, France-based champagne producer Groupe Taittinger, and its Paris-based subsidiary Société du Louvre. The group operates 70 luxury hotels, including the Paris landmark H^tel de Crillon, as well as Europe's second-largest budget hotel chain. The vendors were more than 40 members of the Taittinger family, Frère's Compagnie Nationale A Portefeuille, Sociét é Fonciére, and Financiére et de Participations, an investment vehicle of France's Peugeot family. Starwood is now expected to sell the champagne arm for up to €600 million, in order to refocus the group on its hospitality business.
ING wins Abbey
ING Real Estate Investment Management and JP Morgan have been successful in their £1.3 billion ($2.4 billion; €1.9 billion) bid for the largest package of commercial properties ever sold in the UK. The consortium was named preferred bidder for the 128-property portfolio being sold by Abbey, the UK bank owned by Spain's Banco Santander. Press reports suggest that ING intends to break up the portfolio of assets, which were previously owned by the bank's Scottish Mutual and Scottish Provident arms, in order to create two funds. Abbey put the portfolio, which includes 6.5 million square feet of leasable space, on the market last April. Unsuccessful bidders included a consortium consisting of Apollo Real Estate, REIT Asset Management, and two entrepreneurs; and Prudential, backed by the Royal Bank of Scotland.
Deutsche exits Paris movie theater
Deutsche BankReal Estate's Global Opportunities Fund has sold a building on Paris' main retail highway to French private equity group LBO France in a deal valued at €118 million ($142.2 million). The building, on the corner of the Champs-Elysees and Rue Lord-Byron, houses the Lido Cabaret and UGC Normandie cinema. It covers a total of 20,200 square meters, including commercial, residential and office space.
Goldman eyes German property unit
Whitehall, the private equity real estate arm of US investment bank Goldman Sachs, is in exclusive talks to buy Deutsche Real Estate AG (Dreag), a unit of the insolvent Germany property group Agiv Real Estate AG. The firm is reportedly offering approximately €300 million ($364 million) for Dreag, which owns a portfolio of 60 commercial properties in cities including Berlin, Hamburg, Frankfurt and Munich. It reported a net loss of €10 million last year. Unsuccessful bidders for the company are thought to include German real estate company IVG, UK-based opportunity fund Patron Capital, U.S. investment group Citigroup and German shipbuilder Rickmers.
Kleinwort in £37m nursing home deal
Kleinwort Capital Limited (KCL), the UK mid-market private equity firm, has acquired four residential care homes for the elderly in a £37 million ($66 million; €53 million) deal. The homes were acquired through the takeprivate of listed residential care group Abbott Healthcare Plc. They will now be managed by a newly formed company, Healthcare Homes Group (HHG), which the firm plans to use as a base for a buy-and-build strategy. Philip Rattle, the KCL director who led the investment, told PERE: “The UK market is characterized by six or seven large players which have about a 14 percent market share, so it's highly fragmented. We see the opportunity to create a medium sized care homes group with a specific geography.”