Phoenix backs Abbey Hospitals’ MBI

Investee Company – Abbey Hospitals Group (UK)

Investee Company Business – Own and operate private hospitals

Type of Financing – Management buy-in

Equity Providers – Phoenix Equity Partners

Equity Leader (Individual) – James Thomas (Phoenix Equity Partners)

Debt Providers – Bank of Scotland Corporate Banking

Debt Type – Senior Debt

Debt Leader (Individual) – NK

Equity Amount – NK

Total Deal Value – £25 million

Other Advisors – Joanne Hartley and Andy Powell at PricewaterhouseCoopers

Comments – Lancashire-based Abbey Hospitals Group, a chain of private hospitals operating in north west England, has been acquired in a management buy-in, valued at £25 million. Equity was provided by Phoenix Equity Partners, while Bank of Scotland Corporate Banking provided senior debt. A new company, Covenant Healthcare Ltd, has been set up to make the purchase. Dr Magdy Ishak, CEO of Covenant, led the management buy-in team. The deal will enable the group to develop and strengthen.

Phoenix Equity partners is an independent private equity fund management business which manages four private equity funds with capital exceeding £500 million. Following its management buyout from Credit Suisse Group in March 2001, Phoenix is owned by its executive team. It focuses on mid-market UK private businesses valued at between £20 million and £200 million and its target equity investment is between £10 million and £50 million. Phoenix concentrates its investments in six sectors: media; financial services; leisure; business services; consumer (including healthcare); and transport.

Founded in March 1997, Abbey Hospitals Group was created to build an independent group of private acute medical and surgical hospitals. Five hospitals were acquired in March 1997, four from Independent British Healthcare and the fifth from an individual owner. A sixth hospital was purchased in north Liverpool in September 1998 and other facilities in February 2002. The group generates income from self-paying patients, patients with private medical insurance and NHS funded patients. Abbey performs a broad spectrum of medical procedures for patients including radiology, surgery, pathology and physiotherapy.

James Thomas, a managing partner of Phoenix and a non-executive director of Covenant, said: “We are delighted to be backing such a top quality management team in a sector where there is so much opportunity. We look forward to supporting Dr Ishak and his colleagues as they develop the business into a thriving healthcare group.”