Capital sans frontières

Brexit may have thrown up obstacles in certain areas of the economy but European investor interest in UK health and social care goes from strength to strength

The ownership history of the Priory Group in many ways tells the story of private investment into the UK’s health and social care sector. Having changed hands several times since the 1980s, one of the sector’s prestige brands has been associated with a number of leading figures and institutions in the market, as they scaled the famous Roehampton facility from a single site to a mental health powerhouse – enlarging the group and enriching investors along the way.

As with many social care businesses that expanded rapidly over this period, Priory ultimately fell into the hands of creditors in the noughties as the 2008 global recession unfolded – in this case, Royal Bank of Scotland, via its purchase of Dutch bank ABN Amro (which had bought Priory from Doughty Hanson for £875 million in 2005).

RBS offloaded the business to US private equity firm Advent International for £925 million in 2011 (leaving around £133 million for the bank, once the business’s debt had been repaid), which in turn sold Priory to US healthcare services firm Acadia for £1.34 billion in 2016. Having also previously acquired Partnerships in Care, a rival player, Acadia ultimately fell foul of the Competition & Markets Authority and was forced to divest a number of assets, in turn creating Elysium Healthcare.

The latest chapter in its story saw Priory in January acquired by the Amsterdam-headquartered private equity firm Waterland for £1.1 billion, which plans to merge the business with its portfolio company MEDIAN, Germany’s largest provider of rehabilitation, neurology and orthopaedic treatments, and in one fell swoop create a pan-European healthcare services player.

Whether or not Waterland succeeds with its ambitious plans for Priory, the transaction is notable for the involvement of cross-border European capital once again in the care sector. Since 2019, when Belgian REIT Aedifica completed the acquisition of the Lone Star care home portfolio, the presence of our European neighbours in the market has become starkly apparent. Aedifica’s competitor, Cofinimmo, also started the year by announcing it had completed its acquisition of six nursing and care homes and a rehabilitation unit in Ireland. 

The presence of overseas capital in the market is nothing new – indeed, Priory’s original founding investor back in 1980 was a US healthcare company (Community Pyschiatric) but Waterland’s investment is a timely reminder of the enduring appeal of the UK market to global investors.

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