Avery Health, Optimum Care and Willowbrook Healthcare

Transaction Background

Since October 2005, Graphite Capital has invested in three separate businesses in the elderly care homes sector founded by the same senior management team. The initial deal, Avery Health, was a development capital investment. Avery grew rapidly, completing six bolt-on acquisitions to secure 21 care homes (1200 beds) within 15 months. The business was sold in 2007. Optimum and Willowbrook are two successor vehicles formed to continue the growth strategy in the sector through acquisitions and new builds.

Deal Attractions

Graphite has extensive expertise in the sector and Avery was our fifth care homes investment. The management team is highly experienced and has a successful track record. The economic fundamentals of an ageing population and a decline in the supply of high quality beds suggest a continuing promising medium term profit outlook. The sector remains fragmented and many older homes need to be replaced.

Achievements

Graphite has committed over £80 million of equity to the three companies in support of their growth strategies
in excess of £170 million of bank debt has been secured alongside this to fund the businesses
Graphite worked actively with the management team on the banking transactions and the home and site acquisitions undertaken to build up the groups

Exit / Growth

in April 2007 sixteen of Avery’s mature homes were sold to Southern Cross Plc for £96.5 million generating proceeds to Graphite of 2.3 times the amount invested and an IRR of 92.1%
simultaneously, Graphite and the Avery management team established Optimum Care, which took on 5 Avery homes and has grown its portfolio to 13 homes since
with Optimum’s finance facilities fully drawn, Willowbrook was established in October 2008 with committed capital of £53 million which was increased by a further £24 million in April 2010
Willowbrook has eight units already and is actively looking to acquire homes and development sites to expand further