Nursing home group unveils £550m flotation
Monday 05 June 2006
Britain's biggest operator of nursing homes for the elderly, Southern Cross, is to list on the stock market, with a valuation of some £550m.
The flotation marks an improvement in fortunes of the sector, which is dependent on public sector expenditure, after many providers went private or bust in the 1990s.
Southern Cross has 6 per cent of the total beds available in a still highly fragmented market reckoned to be worth £11.7bn a year - Britain's rapidly ageing population means growing demand for the industry.
The company has 578 homes and 28,748 beds and operates under two brands: Southern Cross Healthcare and Ashbourne Senior Living. It also offers services for younger people with physical or learning disabilities under the Active Care Partnerships brand.
Philip Scott, the chief executive of Southern Cross, said: "Residential care is the most appropriate and efficient way to care for the very dependent elderly, and there is increasing demand in the UK today for 24-hour care services to meet the needs of an ageing dependent elderly population.
"Having led the much-needed consolidation of a fragmented market, Southern Cross now has a leading position in the UK care homes sector, with highly respected brands and many opportunities for sustainable growth in future years."
Among acquisitions made by Southern Cross are Ashbourne and NHP, bought for a combined enterprise value of £1.2bn. NHP used to be listed but was one of the operators that collapsed under a mountain of debt.
The initial public offering will seek to raise £275m, which will provide a partial exit for Blackstone, the US private equity group that owns an 88 per cent stake. The management has a 12 per cent interest, with Mr Scott owning the greatest share, but it is understood that most of this holding will be retained.
The Government changed the financing of care in the mid-1990s by transferring funding for nursing homes from central government to local authorities. The local authorities ran out of money and care home operators found themselves with too many empty beds.
Today, local authorities have better systems in place for funding nursing homes and the shake-out of the sector has brought supply into better balance with demand. The top players in the industry now have occupancy rates of more than 90 per cent. The biggest providers after Southern Cross are Bupa, Four Seasons Health Care and Barchester Healthcare. The closest listed rival, Care UK, is a tenth of the size of Southern Cross.
A large number of "Mom n' Pop" operators remain in the industry and one of the objectives of the listing is to enable Southern Cross to make further acquisitions. The company, which has always been in private hands, also aims to grow its higher-margin Active Care business.
- 1 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 2 Mother of newborn Baby No 59 trapped in sewer pipe told Chinese police she 'heard crying' when she raised alarm
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Tennis fan suing Australian Open organisers for 'failing to shade spectators' during Murray match
- 5 This crazy skiing video will leave you feeling queasy
Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
AirAsia QZ8501: Black box reveals warning alarms 'screamed' before crash, as more bodies recovered from near fuselage of jet
Rob Lowe hits out at White House decision not to meet Israeli leader
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign
British Muslim leaders outraged after Eric Pickles says followers of Islam should 'prove their identity'
UK terror fears: My jihadist son returned from Syria mentally scarred – now he is being ignored
Nigel Farage: NHS might have to be replaced by private health insurance
Billy Crystal: 'Stop shoving gay sex scenes in my face'
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
iJobs Money & Business
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...
£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...