M&A activity
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Investor overview
the market presents an attractive opportunity for M&A
With strong long-term fundamentals and a fragmented landscape, the market presents an attractive opportunity for M&A. Favourable demographic trends and increasing property prices, underpinned by central government support, have generated significant interest among a broad range of investor types:
- Trade: Such buyers are continuously seeking consolidation opportunities to generate economies of scale, buying power and to capitalise on efficiency gains from central functions
- 19 trade deals have occurred since the start of January 2021
- Traditional PE: Focused on buying and developing a platform from which they can expand into new geographies and adjacent service lines
- Nine PE deals have occurred since the start of January 2021
Long-term earnings stability and real estate ownership has also proved attractive to capital providers
- Infrastructure funds and REITs: Stability of long-term cash flows combined with non-cyclical growth has generated substantial interest from infrastructure funds and REITs, both before and during COVID-19. Such features form defensible investments with the additional security and upside potential of increasing property prices
- There have been seven acquisitions by infrastructure funds and REITs since the start of January 2021
Long-term earnings stability and real estate ownership has also proved attractive to capital providers, with a growing pool of funders now available to investors; banks remain core whilst the appetite among debt funds has continued to increase as they pursue more defensible assets as a result of COVID-19.
There have been several notable recent deals in the homecare market, a trend expected to continue as the demand for homecare increases
Overview of recent deals
There have been several notable recent deals in the homecare market, a trend expected to continue as the demand for homecare increases due to the pandemic. Notable deals include Summit Partner’s acquisition of City & Country Healthcare Group Limited, Clearwater International advised Palatine’s acquisition of Routes Healthcare and, more recently, Weight Partners Capital’s investment in Grosvenor Health & Social Care.
There has also been considerable M&A from a care at home (including supported living) perspective, such as Stirling Square Capital Partners’ acquisition of Consensus Support Services Ltd, the merger of Reside Housing and Progress Housing, and Intrivia Capital’s investment in Sequence Care Group.
Trade deals
• In January 2022, Active Care Group announced a merger with Huntercombe Group had been legally confirmed, creating a national provider of complex care, delivering local care pathways
• In December 2021, Ramsay Health Care, a global healthcare business headquartered in Australia, announced an agreement had been reached to acquire Elysium Healthcare, a leading UK-based mental health care provider for £775m from BC Partners. The acquisition represents an opportunity to expand into the UK, complementing Ramsay’s existing UK hospital business and acute care operations in Australia, France, and Sweden
• In September 2021, two leaders in the supported living sector, Reside Housing Association and Progress Housing Group, announced confirmation of their merger, with the aim of becoming the leading UK provider of supported living, with a focus on individuals with autism or learning disabilities. Reside owns or manages 1,450 supported living tenancies, in addition to Progress Housing’s 3,100, with over 45 years of combined experience
• City & County Healthcare Group Limited (C’&C’”) acquired MC Care Holdings Limited, an Apposite Capital asset, in March 2021. Formed in 2017, MC Care Holdings comprises Complete Care, a national provider of nurse-led complex care at home, MiHomecare, a domiciliary care provider and Noble Live-in Care, a live-in provider. This followed C&C having been acquired by Summit Partners (see PE deals below for details)
• National Care Group Limited, a residential care services provider, has grown through a buy-and-build expansion strategy, having made four acquisitions in 2018 and, more recently, acquired Steps Residential Care Limited, a residential care provider to people with learning disabilities, mental illness, and substance abuse problems, followed by Stepping Stones Care Homes, a provider of rehabilitation for people with complex mental health needs, in June 2020. The Group serves 1,300 adults across over 300 settings
PE deals
• In March 2022, Blue Ribbon Healthcare Group, a provider of residential and supported living services for adults with autism and learning disabilities, secured investment from Queens Park Equity (QPE). Since forming in 2016, Blue Ribbon has successfully opened nine residential and supported living services across the North West, with investment providing the resources to provide additional services
• Reuben Brothers acquired Avery Healthcare Group Limited in February 2022, a senior living sector care provider, offering dementia care, nursing care, residential care, and respite care
• In December 2021, Grosvenor Health and Social Care, a leading UK provider of homecare, was acquired by specialist healthcare services PE investor Weight Partners Capital for an undisclosed sum
• Apposite Capital announced its acquisition of Health & Case Management Limited, a provider of rehabilitation services for both physical and mental health needs, in November 2021
• Sequence Care Group (Sequence) received investment from Intriva Capital in September 2021. Founded in 2001, Sequence is a leading provider of supported living and residential care homes for adults with learning disabilities, employing over 760 people and operating across 16 locations in Southern England. This was Intrivia’s first healthcare transaction, buying Sequence from PE group Horizon, which had owned Sequence since 2013
• In August 2021, Mubadala Capital, a UAE-based global ventures platform, bought Witherslack Group, an independent, special needs education schools and care programmes provider, for £590m
• In June 2021, a majority stake in Routes Healthcare (Routes), the UK-based homecare services provider, was sold by PE firm Key Capital Partners to Palatine Private Equity. Headquartered in Cheshire, Routes employs 120 operational and management staff in addition to 1,000 carers and operates 14 service centres
• Summit Partners acquired C&C in December 2020 following C&C’s recent buy-and-build driven expansion, which included acquisitions such as Total Community Care, Advantage Healthcare and Stand Nursing. C&C is the largest provider of community-based home and social care services in the UK
• Acadia Healthcare Company, Inc., a US-based provider of behavioural healthcare services, announced in December 2020 it had agreed to sell The Priory Group to Waterland Private Equity for £1.08bn. The Priory Group supports over 30,000 people a year in the UK across 450 facilities, with a focus on mental health, addiction rehabilitation and adult care. In combination with Median Klinken, a Waterland portfolio asset, Waterland intends to create a European leader in rehabilitation healthcare
• Consensus Support Services Limited (Consensus) was acquired by Stirling Square Capital Partners in December 2020. Consensus operates more than 90 services which provide specialist residential care and supported living services to nearly 600 individuals with learning disabilities, autism spectrum disorder and other complex needs
• In November 2020, Exemplar Health Care (Exemplar), a leading UK-based provider of high-acuity care to individuals living with complex physical and mental needs, was bought by Ares Management Corporation. Exemplar was previously bought by Agilitas Private Equity in 2016 and has homes in Yorkshire, Humberside, the Midlands, the North East, and North West
• Aspirations Care was acquired by Elysian Capital, via its Elysian Capital II fund, in June 2019. Having been acquired by August Equity in 2012, Aspirations Care had grown to over 900 employees, providing supported living services to adults with learning disabilities and complex needs across the UK
• Apposite Capital acquired Swanton Care and Community (Swanton) in July 2017. At acquisition, Swanton operated 24 specialist residential care homes, focused on adults with complex learning disabilities, mental health disorders and acquired brain injuries. Swanton provided over 250 registered beds and employed c.780 people. Since 2017, a buy-and-build strategy has comprised of several further acquisitions including;
- Courtyard Care in January 2019, which operates a group of leading children’s specialist residential homes across North West England
- Values in Care and GRS Care Limited in May 2019. Both businesses are specialist adult residential and supported living providers in Wales
- LH Social Care, which provides care at home, and Lavender Group Homes, a group of residential care homes in Northamptonshire, both acquired in October 2021
• Salutem Healthcare, a leading UK residential healthcare investor for those with learning disabilities and high acuity needs, has also pursued a buy-and-build strategy in recent years. Acquisitions include:
- Pathways Care Group and Modus Care Group in April 2017. The companies support children and adults with a wide range of physical and learning disabilities
- Clearwater Care, a Synova Capital asset, in November 2017. Clearwater Care provides specialist care services for people with complex needs and severe learning disabilities in both a residential and supported living setting
- Transfer of disability charity Scope’s services in December 2017, including three education facilities, 38 care homes and c.1,300 staff
Infrastructure funds and REITs
• Civitas Social Housing, the first supported housing REIT dedicated to investing in social care housing and healthcare facilities now has over 1,000 properties having made numerous recent acquisitions, including:
- Four supported living properties in the East of England in June 2021
- 10 supported living properties in Hertfordshire, Essex, Suffolk, and Wales in May 2021
- 15 supported living and care facilities in South Wales in April 2021
- 72 healthcare facilities from Heathcotes in November 2020, providing specialist residential accommodation for adults and children with learning disabilities, mental health and associated complex needs
- New Directions Flexible Social Care, a step-down supported living business with seven properties and 48 registered beds across Hertfordshire, which Civitas purchased alongside TLC Care Homes in March 2020
- FieldBay, a large chain of specialist care homes operating across South Wales in April 2019
• In January 2022, Voyage Care Group, owned by Partners Group and Duke Street, announced it had been acquired by Wren House Infrastructure, a London-based infrastructure fund. Voyage Care employs 10,000 staff across the UK and provides supportive care nationally for people with learning and physical disabilities, brain injuries, autism, and complex needs
• Ancala Partners LLP (Ancala), an independent infrastructure investment manager, acquired Ludlow Street, a specialist care and mental health provider, in January 2022. This will become part of the Holmleigh Care Group, which was acquired by Ancala in April 2020. Founded in 2000, Holmleigh operates across 31 homes when acquired and provides essential residential care, supported living and domiciliary care services to adults with a varied range of disabilities and challenges
• A number of notable deals also took place prior to COVID-19, including:
- In December 2018, Australian-headquartered AMP Capital acquired Care Management Group, a UK-based social care company, for c.£200m, in addition to The Regard Group, one of the UK’s largest specialist care providers at the time, which was purchased from Montreux and Macquarie. The two acquisitions were merged post-transaction to form Achieve Together which is now a leading UK specialist care provider for adults with learning difficulties and mental health issues. The combined entity has a total of 2,300 beds across 340 facilities, having purchased Montana Healthcare in 2020, a portfolio of specialist care facilities, and United Health Limited in August 2021, a leading provider of specialist support for people with learning disabilities, autism and associated complex needs
- In October 2018, Caledonia Investments plc, a UK-based listed investment trust and private equity firm, sold Choice Care Group, a UK-based leading provider of residential and supported living services for people with learning disabilities and mental health conditions, to iCON Infrastructure for £99.4m. In March 2021, Choice Care Group then acquired Hertfordshire-based specialist care provider, Inspiration Care Limited
- Antin Infrastructure Partners, a leading French infrastructure investor, acquired Kisimul, a UK-based provider of care services for people on the autism spectrum, in October 2017. The sale is thought to have been worth over £200m
Overseas
• In December 2020, Korian, the French nursing care provider, announced it had completed the acquisition of Inicea from Antin Infrastructure Partners for over £300m. Inicea is one of France’s leading private operators dedicated to psychiatric care, consisting of 11 clinics with over 1,200 beds and day care places. Korian has also made a number of subsequent acquisitions in 2021 including:
- Berkley Care, a Berkhamsted, Hertfordshire-based luxury care home group in March 2021
- ITA Mental Health, the third largest player in mental health in Spain
- Gruppo Sage, Italian family-owned mental health clinics operator
- Leonardo da Vinci Centro Medico Diagnostico outpatient centre and the CDC Leonardo surgical clinic in Florence
- Santa Croce, an Italian family-owned medical and healthcare service group
• Stockholm-headquartered Ambea AB, which provides residential care services for people with special needs across Scandinavia, has made several recent acquisitions including:
- Aleris Group AB's Aleris Care business operations in Sweden, Norway, and Denmark in Jan 2019 for €249m, making Ambea the largest care provider in the Nordic region
- Casablanca Bo & Erhverv and Vivamus, two Danish care providers for disabled children, in December 2019, acquired through Ambea’s Danish operations, Altiden Netværk ApS
- EKKOfonden, one of Denmark's largest providers of social care, in January 2021
• BetaMed S.A., the largest medical company in Poland providing long-term care, both in the patient’s home and through its facility in Chorzów, was acquired by French healthcare provider Air Liquide Healthcare in September 2021
• In June 2021, Orpea Netherlands B.V. acquired Zorggroep't Zicht B.V., a Dutch provider of housing and care for people who suffer from autism, a psychiatric disorder, or other disabilities. This followed its acquisition of Brindley Healthcare Limited in September 2020, an Irish nursing home operator
• Apax Partners SAS acquired The NL Mental Care Group B.V., a Dutch mental health care service provider in the Netherlands, in January 2021
• iCON acquired Nua Healthcare Services Limited in January 2021, the largest private specialist residential care provider in Ireland, with a portfolio of over 50 residential homes
