Advent wins Priory in second mega deal with RBS

Advent has struck a deal for RBS’s stakes in Priory Group, valuing the company at £925m, as the bank continues to rebuild its balance sheet.

Months of speculation as to a potential private equity deal or IPO for Priory Group, a provider of mental health and specialist care services best known for its rehab clinics popular with celebrities, have ended as RBS has agreed to sell its holdings to Advent International.

Advent said in a statement it will acquire the group in deal giving the company an enterprise value of up to £925 million (€1.1 billion; $1.5 billion). Advent will acquire a minority stake of undisclosed size from RBS, which said in a separate statement it will net £133 million in cash from the sale following the settlement of outstanding debt. Advent, however, has also amassed stakes from Global Health Partners, a Sweden-based healthcare provider, who sold its minority position in the group for £1.75 million.

The RBS deal, which is expected to complete before the end of the quarter, will be financed from Advent’s €6.6 billion Global Private Equity VI fund which closed in 2008.

Favourable trends will result in growing demand for health care services, said Advent in a statement. Greying populations in need of more specialist care, lowering social stigma towards mental health issues and improved diagnostic methods will help contribute to the rise.

The deal also represents Advent’s second visit to RBS’s government induced tag sale of non-core assets. Last August the firm teamed up with fellow Boston-based firm Bain Capital in acquiring RBS WorldPay, agreeing a deal that gave the card payment subsidiary an enterprise value of up to £2 billion.

Late last year Bain reportedly made a bid for Priory but was unable to reach an agreed price with RBS. Bain’s London office could not be reached by press time. 

RBS, which was saved by the UK taxpayers following the financial crisis, is in the process of shedding non-core assets as a way of improving liquidity and capital reserves.