LGV goes private

The UK private equity firm has formed its own hospital chain after acquiring nine properties.

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.


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