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Graphite Capital backs City & County MBO

Private equity firm Graphite Capital has backed the management buy-out of domiciliary care provider City & County Healthcare from Sovereign Capital for an undisclosed sum.

Earlier this year that Sovereign was considering a flotation of the company. Sovereign told HealthInvestor that it planned to raise £60 to £80 million in new money from the markets.

Headquartered in London, City & County provides high quality homecare assistance and specialist care services for young people and adults with learning disabilities, mental health needs and brain injuries.

Sovereign invested in City & County in 2009, at which point the company operated from 13 branches in London only and provided 30,000 hours of care per week.

Sovereign backed 15 bolt-on acquisitions for City & County during its stewardship, making the business the fourth largest domiciliary care provider in the UK.

It now operates 64 branches across the country, with workers providing around 145,000 hours of care a week. Sales rose from £20 million to over £100 million during this period too.

Graphite partner Mark Hall said: “C&C [City & County] is a first class business run by a strong management team and provides a critical service. The care sector is one we know well and we believe that, with our help, C&C will capitalise on its excellent potential for growth, both organically and via strategic acquisitions.”

The acquisition of the domiciliary care provider represents the first investment made by Graphite’s new £500 million fund, Graphite Capital Partners VIII, which closed in October.

Investec Growth & Acquisition Finance fully underwrote the finance package pre-deal, providing funding security for Graphite. The Investec team also successfully syndicated two thirds of the financing to HSBC and Lloyds.

The loan facility is made up of a combination of senior secured term loans, a senior secured revolving credit facility and a senior secured acquisition facility.

Also commenting on the deal, Sovereign partner Dominic Dalli (pictured) said: “We are delighted with the growth that City & County has achieved during our investment, which is a testament both to our investment model, and, more importantly, to the hard work and dedication of City & County’s management team and care workers. 

“Our approach is to provide portfolio companies with serial rounds of funding to enable them to meet their growth goals, whether that growth is through acquisitions or roll-outs. City & County’s tremendous growth in only four years is a great example of this model in practice.”

King & Wood Mallesons SJ Berwin, Rothschild, Alvarez & Marsal, PwC, Westminster Advisers, Gallagher Heath and Intuitus provided transaction advice to Graphite.

KPMG, Reed Smith and LEK Consulting advised Sovereign on the deal.

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Posted on: 06/12/2013

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