Barchester Healthcare sale attracts interest from US investor Welltower

Group owned by Dermot Desmond, JP McManus and John Magnier for sale for €2.8bn

Dermot Desmond, JP McManus and John Magnier first invested in Barchester 24 years ago. Photograph: Eric Luke

Dermot Desmond, JP McManus and John Magnier first invested in Barchester 24 years ago. Photograph: Eric Luke

 

Barchester Healthcare, the UK care homes group co-owned by businessmen Dermot Desmond, JP McManus and John Magnier, has reportedly attracted the interest of New York-listed seniors housing real-estate investment trust, Welltower.

The London-headquartered group operates more than 200 care homes and seven registered hospitals. It was put up for sale earlier this year by its owners, who also include Derrick Smith, part owner of the Coolmore Stud racehorse breeding business in Co Tipperary with John Magnier, with a price tag of £2.5 billion (€2.8 billion).

Barchester, which is being marketed by US banking giant JP Morgan for the businessmen, is also being circled by another US healthcare-based real-estate group, Ventas, and Seattle-based property investment firm Colombia Pacific Advisors, according to online mergers and acquisitions publication Betaville.

The Irish tycoons first invested in Barchester 24 years ago, a little over a year after it was set up by British entrepreneur Mike Parsons. The company had an average of 15,462 staff last year and provided more than 12,000 beds across the UK.

A spokesman for the group declined to comment on the sale process.

Welltower, previously known as Health Care Reit, and Ventas were reported in May 2013 to have been circling Barchester as the group was looking to refinance its debt. The company went on to repay about £900 million four months later, just weeks before the debt was due to mature, after selling properties to a group of investors and leasing them back.

Indicative bid

Barchester, one of the UK’s four largest long-term care providers, was previously reported by specialist publication Mergermarket to have lured indicative bids from a Singaporean sovereign wealth fund, a unit of Australian banking group Macquarie and Paris-based private-equity firm PAI Partners.

Barchester disposed of its only Irish facility, the 117-bed Knightsbridge Care Village in Trim, Co Meath, to French-owned nursing home group CareChoice last year for an estimated €20 million.

Barchester’s earnings before interest, tax, depreciation, amortisation and rent increased by almost 7 per cent last year to £174 million, as turnover rose nearly 5 per cent to £591 million.

Elsewhere in the sector, the UK’s biggest care homes operator, Four Seasons, may find itself ultimately on the market as it works on a restructuring plan with H/2 Capital Partners, a US hedge fund that controls much of its £500 million debt mountain.

Four Seasons, which provides care to 17,000 people, is currently benefitting from a forbearance period running to December 10th, though that may be extended.