Sagitta closes first deal from new fund

The lower-mid market UK private equity firm has invested £6m in a specialist provider of care and residential services, its first deal since becoming independent.

London-headquartered Sagitta Private Equity has made its first investment from its £105 million (€158 million; $193 million) Sagitta Private Equity Partners III fund, which closed in February this year.

The firm has invested £6 million for a minority equity stake in the £22 million financing of The Regard Partnership (Regard). Regard is a UK-based specialist provider of care and residential services to people with learning disabilities.

Founded in 1994, Regard currently manages 70 care homes throughout the UK and has grown through the acquisition of both individual and groups of homes. The company recently acquired Westminster Healthcare’s learning disability business.

Sagitta initially approached Regard “more than 18 months ago” according to managing director Kevin Grassby, who attributed Regard’s impressive growth to: “”delivering the highest standard of care to its clients” and the strength of the management team.

The deal is the latest in a number of small to mid-sized transactions in the healthcare sector. Last week, Granville Baird Capital Partners invested £9 million in the £22.4 million buyout of Castlecare Group, a care provider for young people with behavioural problems. In April, Inflexion Private Equity led the £13 million buyout of Healthcare Knowledge Systems International, a provider of healthcare information services to hospitals.

The sector has also attracted interest from larger buyout firms. Earlier this month UK-based Alchemy Partners reaped four times its original investment in the £775 million sale of UK nursing home operator Four Seasons to Allianz Capital Partners. In May, a consortium led by Texas Pacific Group acquired US acute care facilities operator IASA Healthcare for $1.4 billion.

Sagitta capped its third small and mid-market fund on £105 million, despite investor demand that could have allowed the firm to raise “significantly in excess” of that total, according to the firm.

The close of the fundraising also coincided with the announcement of the firm’s independence from investment manager, the Sagitta Group. It said that “close ties” would be retained with its former parent organisation.

Sagitta Private Equity has recently moved offices within London, following the hire of two experienced buyout professionals to the firm in May. Duncan Calam and Toby Wyles joined the firm as directors from pan-European mid-market firm Bridgepoint and global buyout firm Apax Partners respectively. The firm now has seven investment professionals.