KPS seals 15x healthcare exit

The firm’s $315m sale of Attends Healthcare, which it formed in 2007, is one of several high-profile healthcare exits this year.

KPS Capital Partners’ sale of Attends Healthcare is the latest profitable healthcare exit in a year filled with large realisations in the sector.

The firm has agreed to sell adult incontinence product maker Attends to NYSE-listed listed paper company Domtar Corporation for $315 million. The deal generates a 15x cash-on-cash return and a 120 percent IRR for KPS, according to a source close to the situation. The transaction is expected to close by the end of the third quarter.

KPS formed Attends in 2007 after acquiring the North American assets of 3i portfolio company PaperPak and rebranding the business, which at the time was cashflow negative.

“It was the first entrant into the disposable adult incontinence market so they really had created a product that still had a tremendous amount of value, they just had manufacturing issues they weren't dealing with” partner at KPS Raquel Palmer told Private Equity International. “We knew we could solve the operational issues of the business and make the product profitably.”

In June, KPS recapitalised Attends for $133 million, collecting $35 million in cash distributions for investors. It was the second time KPS had recapitalised Attends in 14 months, following a $98 million recapitalisation last March to refinance outstanding debt and fund a $60 million cash distribution for stockholders.

The sale of Attends is one of several healthcare exits for private equity firms this year. In June, CCMP Capital made five times its money after selling Medicare services company CareMore Health Group to health benefits company WellPoint.

During the first quarter of the year, Bowmark Capital sold Advanced Childcare to GI Partners and Onex sold Emergency Medical Services to Clayton Dubilier & Rice, generating return multiples of 4x and 10x, respectively.