One of Britain’s leading providers of specialist care to people with disabilities is to be bought out by a Canadian pension fund, underlining private equity’s continuing interest in the care sector despite high-profile blow-ups during the downturn.
OMERS, which invests Ontario’s municipal employees’ retirement pot, is to pay £207-million (($329.5-million Canadian) for Lifeways, which focuses on supporting people with special needs in their own homes rather than in care accommodation.
Private equity’s involvement in the care industry has led to some public relations debacles after over-leveraged buyouts soured, resulting in threats of care home closures and calls for tighter regulation of the industry.
Southern Cross, the retirement home provider once owned by Blackstone, the US buyout group, was wound up last year after being squeezed by higher rents and lower payments from local authorities. Four Seasons Health Care was taken over by Royal Bank of Scotland and other creditors after a Qatari-led buyout soured. It was sold on in April to Terra Firma, the buyout group led by Guy Hands.
Mark Redman, who heads OMERS in the U.K., said Lifeways’ “supported living” model was in line with government policy to see more people cared for at home, which it sees as more efficient both from a quality and cost point of view.
The London-based company, founded in 1995, offers different levels of support for adults with a range of disabilities, including autism and brain injuries. It also offers tailored holidays, or “respite breaks,” for the people it supports.
Despite most of the bills being paid for by cash-strapped local authorities, the growth prospects for Lifeways remain positive, Mr. Redman said.
He said “1.2 million people in the U.K. have learning disabilities of some form, a number of which are being looked after by the private sector. This is an area where, if anything, funding by local authorities has increased in recent years.”
Lifeways, which with 6,300 staff is the largest group in a highly fragmented market, is being sold by August Equity, a mid-market investor that backed chief executive Paul Marriner in a 2007 management buyout. The company has since grown rapidly both organically and through acquisitions.
Royal Bank of Canada advised OMERS on the acquisition. August was advised by Rothschild.