Care for Kings
An investment in Kingsclear in the early 1990s gave Graphite exposure to the fragmented but expanding residential elderly care market. At the time of the investment there were few large businesses in the sector and, as a result, it was an attractive market in which to back good entrepreneurs.
Kingsclear Homes was a rapidly growing nursing home business, privately owned and operated by the founding family. The founders had a successful track record of setting up small businesses. Their nursing home start-up, Kingsclear, had grown through a combination of new builds and acquisitions. The homes acquired were expanded and upgraded to modern standards, leading to a rise in occupancy and profitability.
In the early 1990s the nursing home industry was expanding rapidly. The number of frail elderly was increasing and more care homes were required. The care home industry was also highly fragmented and in need of consolidation. The company’s founders had proved to be astute operators, capable of rapidly expanding the business in a growing and consolidating market. The addition of new capital enabled the business to accelerate the rate of organic and acquisitive growth.
Under Graphite's ownership, Kingsclear:
- established an effective head office infrastructure to manage the expansion of the group
- grew the asset base from 322 beds in seven care homes to 995 beds in 19 care homes
- increased operating profit from £1.5 million in 1992 to £3.0 million in 1996
- created a pipeline of new build opportunities to ensure continued profit growth post exit
In 1996 Kingsclear Homes was sold to Northern Rock, generating an IRR of 19 per cent.
