Target: Covenant Care
Sponsor: Centre Partners
Financial Adviser: Seller: Jeffries & Co.
Legal Adviser: Sponsor: Dechert LLP; Seller: Mannat Phelps & Phillips LLP
Centre Partners has landed a third investment for its $880 million fifth fund, buying Covenant Care LLC, an Aliso Viejo, Calif.-based operator of nursing homes. The firm is also in advanced talks with owners of several possible add-on targets.
Financial terms of the deal, which Centre Partners financed by rolling over an existing senior debt facility provided by CIT, weren’t disclosed. The firm typically invests $15 million to $85 million in its targets.
Covenant Care operates 43 nursing facilities and three residential care facilities that provide patients with 24-hour nursing, physical rehabilitation and other health services. The 14 year-old company, which operates across the southwestern and midwestern United States, has placed an emphasis on rehabilitative therapies at its facilities.
The deal, in which management also invested, came together after a Jeffries & Co. team led by Wyatt Ritchie, a managing director based in San Francisco, introduced Bob Bergmann, a senior partner at Centre Partners, to Covenant Care’s management team about nine months ago.
Centre Partners likes the nursing home market given demographic trends that are producing an aging population spending increasing amounts on health care, Bergmann told Buyouts. It’s also cheaper for Medicaid and Medicare to treat patients in nursing homes, rather than in hospitals or long-term acute care centers, Bergmann said.
Covenant Care joins a fifth fund that includes Liberty Waste Services LLC, a New Jersey- and Ohio-based waste transportation and disposal company that the firm bought in December and renamed Environmental Logistics Services. In January, Centre Partners also bought U.S. Retirement Partners Inc., a retirement planner based in Iselin, N.J. In total, the firm expects to make around 10 to 15 investments with the fund.
Centre Partners still holds a number of companies from its fourth fund, a $780 million vehicle closed toward the end of 2003, and its third fund, a $365 million vehicle it closed in 1999.