Phoenix Equity acquires UK healthcare company

Phoenix Equity Partners has led a management buy-in at Abbey Hospitals in what is the third private equity-backed healthcare investment this month.

A management team backed by Phoenix Equity Partners has acquired Abbey Hospitals Group, a UK-based independent group of private hospitals based largely in the north of England and Scotland. The transaction value is thought to be in the region of £25m.

A new company, Covenant Healthcare, has been formed to acquire the firm, which will be managed by Dr Magdy Ishak, the former chief executive of Scotcare Group, which was acquired by CrestaCare plc in 1994.

The acquisition is the second such transaction in a week, following Nikko Principal Investments acquisition of 20 UK private hospitals owned by the Swedish listed healthcare group, Capio AB, for £250m. This month also saw the completion of the 3i-backed management buyout of Westminster Healthcare for £270m.

Phoenix managing director James Thomas said the healthcare sector in the UK offered a great deal of opportunity to investors. “There has been an increased level of spending on healthcare, both in the public and private sectors, which makes it a potentially lucrative sector to be involved in. It is an attractive sector although the quality of management needs to be very high to be successful.” Thomas added that the firm was looking to make further acquisitions, possibly in the psychiatric healthcare sector, although all options were open to consideration.

Abbey comprises six private hospitals and other medical facilities across the UK. The hospitals deliver services to self-paying and NHS waiting list patients. Phoenix joined management in providing equity for the transaction. Senior debt was provided by Bank of Scotland Corporate Banking and Pricewaterhouse Coopers advised on the deal.

Phoenix manages four private equity funds with funds under management exceeding £500m. The firm, which Phoenix executives bought out from Credit Suisse Group in March 2001, focuses on opportunities across media, financial services, leisure, business services, consumer and transport. Recent transactions include an investment in the creation of insurer Wellington Re and the acquisition of luxury shoe retailer Jimmy Choo.