Sponsor: Meridiam Infrastructure
Geography: UK (multiple locations)
Sector: Health care
Deal size: Large cap (>$500 million)
Initial investment date: January 2007
Realisation date: In 2H 2014 £3.431m ($5.350m at consistent exchange rate) distributions were returned to the fund
From inception to Dec 31, 2014 £22.473m ($35.043m at consistent exchange rate) distributions have been returned to the fund
Top-line revenue growth: 2008: $1.84 million – 2014: $10.78 million
EBITDA growth: 2008: $257,000 – 2014: $16.4 million
Average time per month spent with portfolio company (days): 10
Initially a provider of property development services and project finance, Fulcrum Group has evolved into a more diverse business since Paris-based fund manager Meridiam Infrastructure acquired it in 2007.
The London-based company partners with the National Health Service (NHS) to develop primary and community health care facilities. Fulcrum’s current partnerships are: the West London Health Partnership; Building Better Health (Lambeth Southwark Lewisham); South West London Health Partnership; Renova Developments; Bristol Infracare LIFT; and Oxford Infracare LIFT.
In all, Fulcrum has developed and now manages more than 40 buildings with a capital value of over $715 million. All of the businesses are part of the NHS Local Improvement Finance Trust (LIFT) initiative, which brings together local NHS organisations and the Department of Health with a private sector partner.
While partnering with the NHS alone can be a challenge and therefore noteworthy in and of itself, the judges found Fulcrum to have achieved a number of accomplishments, such as taking a “business model, changing it slightly and expanding it to really include a lot more areas and areas of potential growth,” Michelle Karavias, global head of infrastructure at research firm Business Monitor International (BMI), noted.
“They’ve taken what was a very streamlined business […] to something much bigger and so they’ve really found a growth opportunity in the asset they had,” she added.
The company’s figures are a testament to that growth, with top-line revenues rising from $1.84 million in 2008 to $10.78 million in 2014 and EBITDA increasing dramatically from $257,000 to $16.4 million during that same period.
Fulcrum also improved productivity, reducing construction and facilities management costs each by 30 percent and rental costs by 16 percent between October 2004 and June 2011. According to the company, significant improvement in value for money by new supply chain partners was made by renegotiating existing framework agreements to ensure that each project can be procured on a competitive basis. In order to achieve this, Fulcrum proceeded to restructure its team, bringing in more appropriately-skilled people and developing existing staff.
It also developed strategic asset management and estates planning processes, which the NHS has adopted nationally as best practice.
“Fulcrum stood out in my mind because I think social infrastructure is really going to be of increasing importance,” Richard Little, an infrastructure policy consultant and a visiting scholar at Rensselaer Polytechnic Institute, said. “It’s very, very difficult to rate; you’re not always looking for cash returns,” he added. “Part of what I’ve done for the past many years is figuring out how to sell these things to the public side rather than encouraging investments. I thought this was really well done,” he concluded.
Michael Barz, a partner at law firm Dentons agreed: “Fulcrum is an incredibly impressive company that seems to have grown within the UK’s healthcare P3 market in a manner that indicates Meridiam knows what it is doing and has had a hand in making lots of correct decisions with Fulcrum to foster that success.”
Fulcrum’s accomplishments do not stop there. The company has placed particular emphasis on tenant satisfaction with scores consistently increasing between 2004 and 2009.
It also scored points with the judges since all of the buildings in its portfolio are rated either BREEAM [BRE Environmental Assessment Method] ‘very good’ or BREEAM ‘excellent’. According to Fulcrum, one of its health care facilities, the Bluebell Centre, was one of the first in the sector to achieve an ‘excellent’ rating. It is the lowest energy primary care building in the UK and was awarded the sustainability award at the 2009 LIFT Awards.
“You can really see the improvements from 2004 to 2009, in terms of value for money, timeliness, environmental considerations,” Karavias said. “All of these things show that Meridiam has put real thought into improving the business. It’s a difficult market and they’ve come at it from a number of different angles to really make it successful.”