Financial News

  • 13 December 2013, 6:26

Bidders Pounce On Struggling Care Home Group

A pack of private equity investors led by Duke Street Capital is preparing to pounce on European Care, one of Britain's biggest specialist providers of services for people with learning disabilities.

Sky News understands that Duke Street is one of roughly a handful of financial investors which are attempting to take control of European Care, which is effectively owned by its syndicate of lenders.

The group, which consists of a care-homes division and European Lifestyles, which supports adults and young people with learning disabilities and brain injuries through schools and residential and supported living services.

It has become one of the largest such care providers in the UK, but has encountered financial difficulties following a trading downturn.

The company's troubles are being closely-watched by regulators after the similar experiences of groups such as Southern Cross, which collapsed two-and-a-half years ago.

Other financial investors bidding for European Care include DE Shaw and Varde Partners, two funds which specialise in buying distressed debt.

They been acquiring tens of millions of pounds of European Care's loans in recent weeks with a view to proposing a takeover of the company, an insider said on Thursday.

Patron Capital, Oaktree and Graphite are also reported to have expressed an interest in buying the company.

A number of the UK's biggest healthcare providers have undergone financial restructuring recently, including Barchester Healthcare, which operates homes caring for about 10,000 residents.

Barchester is well-known in the City for being partly-owned by the racing tycoons John Magnier and JP McManus, who were instrumental players in the takeover of Manchester United eight years ago.

Like many healthcare companies with substantial property assets, Barchester's debt problems began during the boom when its real estate and operating companies were separated.

Southern Cross, the remnants of which are now being sold, was at one point Britain's biggest care-home operator with 750 sites but ran into financial difficulties and eventually collapsed in 2011.

KPMG and Duke Street declined to comment while European Care could not be reached for comment.

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