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Advent International acquires Craegmoor Healthcare

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18 July 2008, London - Advent International, the global private equity firm today announced that it has acquired Craegmoor Healthcare Group ("Craegmoor") from LGV Capital Limited (“LGV”).

Craegmoor is the UK’s largest independent provider of specialist care for adults and younger people. Its services include specialist care and support for adults with learning disabilities and mental health illnesses, nursing and residential care for older people.

Craegmoor currently supports over 4000 people, employing more than 6,000 members of staff through 234 specialist and nursing care homes, independent hospitals, specialist adult colleges and supported living schemes across the UK. Its activities are primarily funded by local authorities and the NHS.

The Company was founded in 1995 and was acquired by LGV in July 2001. In 2007, Craegmoor reported a turnover of £164 million.

Advent International intends to support the continual operational improvement process introduced three years ago by Craegmoor’s newly appointed senior management team. The emphasis will be on further improving both the standard and consistency of care and support, as well as helping an increased number of people move towards independent living. Advent will immediately allocate £13 million for a capital expenditure programme primarily targeted at improving Craegmoor’s existing care facilities, and will put in place further financial facilities to support both organic and acquisitive growth.

Craegmoor is operating in a growth market, driven by increasing demand for social and mental healthcare provision. The sector continues to benefit from a combination of regulatory, social and demographic factors, including the drive for improved care standards, decreasing mortality rates, longer life expectancy, an ageing or declining lone-parent carer community, and an increasing diagnosis and awareness of mental health issues.

The UK specialist healthcare market is highly fragmented, with the top ten players representing less than 20% market share. As market leader, Craegmoor currently holds less than 5% market share. This represents significant opportunity for consolidation, further encouraged by a drive towards improved care standards and increasing regulatory requirements.

Tom Allen, the Advent International Director who led the investment, said:
“We have followed Craegmoor for over seven years and now believe the timing is right for us to invest in the business. The management team has implemented some highly-effective operational changes over the last couple of years which are delivering tangible results. As new investors, we are able to focus on capitalising the business’ strengths and supporting management in driving further operational improvement and business expansion. In the mid-term, we envisage that Craegmoor will be ideally placed to lead consolidation in the growing specialist care market.”

Ted Smith, CEO since October 2005 today commented:
"This announcement marks the beginning of an exciting phase for Craegmoor. Advent International has been involved in the care sector for many years and we move forward together with shared principles, values and vision. I am delighted.’’

"I hope that today, our staff, service users and their families will share the optimism that my senior management team and I feel for the future of our company and the services we will be providing."

Advent has been an active investor in the healthcare sector for 24 years and has completed 25 investments. Most recently in 2005, Advent acquired Casa Reha, a German nursing home operator. Under Advent’s ownership, an accelerated expansion programme saw the company become the country’s fastest growing private nursing home group, doubling its nursing home portfolio from 24 to 48 facilities nationwide and trebling annual turnover from €53 million to €159 million in a period of 24 months. In 2008, the business was sold to HG Capital, with Advent retaining a significant minority stake.

Advisors to Advent International
M&A support - Citigroup
Commercial - Candesic
Financial and Tax - KPMG
Regulatory - Bevan Brittan
Banking - Houlihan Lokey Howard & Zukin
Legal - Weil Gotshal & Manges
Insurance - Marsh
Enviromental - Environ


About Craegmoor Healthcare

Craegmoor is the largest independent provider of long term specialist care in the UK with a turnover of approximately £164m and employing over 6,000 people. It has a portfolio comprising specialist and nursing care homes, mental health hospitals, specialist adult colleges and supported living schemes with over 4,700 beds across 234 homes.

The wide range of services offered by Craegmoor include:

1. Specialist care and support for adults with learning disabilities and mental health illnesses
2. Nursing and residential care for the elderly
3. Independent Mental Health Hospitals

Craegmoor has 2229 Specialist places including 143 places in three colleges. Craegmoor currently operates 2242 Older People beds and 237 beds in the company’s Independent Hospitals.

Working closely with local authorities, Primary Care Trusts and NHS Trusts, Craegmoor is committed to building partnerships focused on constant service improvements which meet the needs of individual people and which are in line with regulatory requirements and best practice.

Contacts


Tom Allen

Managing Director, UK

T: +44 (0) 20 7333 0800
Office details