Australian health giant Ramsay buys Capio UK

Australia's largest private hospitals group Ramsay Healthcare paid £193m for Capio UK, owner of 22 hospitals including the celebrity rehab favourite Nightingale Clinic.

The deal is the first purchase abroad for Ramsay, which beat out a clutch of rival suitors including Apollo Hospitals Enterprise of India and Life Healthcare of South Africa. Buyout giants Blackstone, CVC, Cinven and BC Partners are also thought to have made it through the final round of bidding. Investment bank Rothschild ran the process.

Capio is the UK's fourth largest private hospitals operator which, additionally, has nine independent treatment centres that also treat NHS patients. The sale comes amid frenetic activity in the UK health sector, where mainly private equity firms have been investing heavily. They are attracted by the aging population and a concerted effort by the Government to outsource certain aspects of healthcare, like long-term care, to the private sector.

Ramsay chief executive Pat Grier said that the company will use Capio's network of sites as a platform to expand here and in Europe. He said: "The UK hospital market is going through a period of fundamental change and now allows public patients to choose whether they want to go to a private or public hospital. This acquisition allows us to achieve critical mass throughout the UK in a market offering good growth prospects."

The transaction also shows that South African firms are zeroing in on Europe, particularly the UK, as a growth market. A leading banker said: "With little scope for growth at home, they are looking at the UK."

Life Healthcare, a major player in South Africa and Botswana, is understood to be actively looking at other opportunities in the UK after losing out on Capio. South Africa's Netcare teamed with Apax last year to buy General Healthcare Group, the UK's largest private healthcare provider. Apax was forced to sell Capio as a result of that deal to appease antitrust regulators. It solds its property assets last year to Sir Tom Hunter and HBOS.

BC Partners has sold the Swiss giant Hirslanden for ¿2.1bn to Medi-Clinic, the third of South Africa's triumvirate of major healthcare groups. BUPA sold its UK hospitals to Cinven earlier this year.