HgCapital exits healthcare for £255m

Castlebeck, sold to a subsidiary of the Barchester Healthcare Group, is HgCapital’s fifth transaction in the healthcare sector in the past 18 months.

HgCapital, a European mid-market investor, has sold specialist healthcare and rehabilitation business Castlebeck to Castle Holdings, part of the Barchester Healthcare Group.
Castlebeck was sold for £255 million (€367 million). HgCapital acquired the business in a secondary buyout from 3i in 2002 for £20 million. Since then, HgCapital has carried out two recapitalisations which have returned 2.6x the cost of capital.
HgCapital was not immediately available for comment.
NM Rothschild, Linklaters, Deloitte, PwC and GVA Grimley advised HgCapital on the transaction. Management were advised by Walker Morris, Jamieson Corporate Finance and PwC.
Castlebeck operates 17 specialist hospitals and care homes across England and Scotland, providing healthcare and rehabilitation services for adults and adolescents with learning disabilities and challenging behaviour.
It is HgCapital’s fifth transaction in the healthcare sector in the last 18 months, including the purchase in April of Paragon Healthcare for £322 million, the firm’s largest deal to date.
In June, HgCapital sold Pharma Bio-Research, a contract research company focused on early-phase clinical trials, to PRA International, a Nasdaq-listed clinical research organisation for €85 million. The same month, ClinPhone, a 1997 investment, floated on the London Stock Exchange with a valuation of £94 million. HgCapital generated a profit of £25.7 million, representing an IRR of 37 percent over nine years.
Healthcare has been a busy sector for private equity. Yesterday, BC Partners and AXA Private Equity acquired Médica, a French nursing home business, from Bridgepoint for €750 million. In January, BC Partners sold its investment in UK private hospital operator General Healthcare Group to a consortium led by Apax Partners for £2.2 billion.