3i achieves 80% IRR on Westminster sale

The private equity group has completed the £525m trade sale of Westminster Healthcare, making four times its money on its 2002 investment.

3i Group has agreed to sell UK private nursing home operator Westminster Healthcare to Barchester Healthcare in a £525 million (€757 million; $947 million) cash transaction.

Barchester, which is owned by Irish horseracing magnates JP McManus and John Magnier, prevailed in an auction in which a number of private equity bidders also participated. According to the Financial Times, financial sponsors Charterhouse Development Capital and Allianz Capital Partners, which recently acquired healthcare provider Four Seasons from Alchemy Partners, also bid for Westminster.

According to a 3i spokesperson, the group quadrupled its original equity outlay on the deal, achieving an 80 percent internal rate of return on the deal. Proceeds from the sale came to £225 million, 3i said.

3i bought Westminster in early 2002 in a £270 million acquisition from financial investors Goldman Sachs Whitehall Funds and Welsh Carson Anderson & Stowe.

New owners Barchester said in a statement the deal would create a healthcare business with 8,000 employees and £265 million in combined revenues this year. The company will have just over 10,000 beds in 163 care homes across the UK.

3i was advised by NM Rothschild. The Royal Bank of Scotland, Bank of Ireland, HBOS and Allied Irish Bank provided Barchester with debt finance.