Palamon seals 3x procurement exit

This marks the eighth divestment from Palamon’s €670m 2006 fund

UK-based buyout firm Palamon Capital Partners has sold Prospitalia, a German procurement services business, to an undisclosed investor, according to a statement.

Financial details of the transaction were not disclosed, but Palamon netted a 3x return on the divestment, the firm said.

Prospitalia provides procurement services to more than 900 hospitals and healthcare facilities across Germany to help lower the cost of goods purchased. The company currently reports a pooled purchasing volume of €1.2 billion.

Since Palamon invested in the business, sales for German procurement services have grown between 5 percent and 10 percent per year, according to Palamon.

“Prospitalia was Palamon’s first investment in the healthcare industry; an investment area in which we have now established a strong track record,” Louis Elson, managing partner at Palamon, said in the statement.

The firm has committed more than €200 million to the healthcare sector in the last seven years. It has backed SARquavitae, a Spanish elderly care provider, IDH, a dental corporate in the UK, POLIKUM, a healthcare provider in Germany, and OberScharrer Group, a German ophthalmology group.

The divestment of Prospitalia marks the eighth realisation from Palamon’s €670 million European Equity II, a 2006-vintage. To date, the vehicle has returned proceeds of €708 million at a return of 2.8x multiple of invested capital on fully exited companies.

Last December, Palamon sold Cambridge Education Group, an international schools operator, to fellow European firm Bridgepoint for £185 million (€223 million, $303 million), netting the firm a 15x return and a 58 percent internal rate of return.

In September, Palamon closed an unusually-structured €210 million Auxiliary Fund, after struggling on the fundraising trail to convince LPs of its investment thesis. “When we say we’re investing in growth companies in Europe, [investors] laugh and say it’s an oxymoron,” Elson told Private Equity International last year. “But Europe is enormous, and pockets of growth are springing up.”

The new vehicle has an investment period of just two years, rather than the standard five to seven. Fundraising sources suggested at the time that this additional breathing space would not only give the market time to recover, but also allow Palamon to deliver more exits from its previous fund.