Four Investors Compete In CaixaBank’s Nursing Home Sale

20 May 2016 – Expansión

There are four players in the race to purchase the Amma residences. The private equity giant Pai Partners and the Maison de Famille, Emera and Armonea groups are the candidates that have made the first cut in the acquisition process and, therefore, will battle the critical bid to acquire the nursing homes and day centres controlled until now by CaixaBank, according to sources familiar with the process.

The four investors have already performed detailed due diligence of the assets with a view to presenting a binding offer, say sources in the market, and they have until “next week” to submit their final proposals. The initial prices valued the nursing homes at around €200 million.

This amount represents just over ten times the company’s EBITDA in 2015, which amounted to €18 million, according to industry estimates. Meanwhile, its total revenues amounted to almost €100 million. Although CaixaBank is the owner of almost 70% of the shares, the sale affects 100% of the capital, because the minority owners (the Caja Duero corporate business group, Grupo Norte, Inverduero, Kintoa, Uve, Bella Castilla and Horizontes de Castilla) are also willing to transfer their stakes, according to financial sources.

Given the identity of the potential investors, industrial players are prevailing in the transaction, which was launched at the beginning of the year. The majority of the candidates of a financial nature who participated in the sales process – which included the fund Permira, amongst others – have been excluded, and all of the parties involved in the final round of bidding have prior experience in the sector. (…).

Consolidation in the sector

The sale of the Amma Group, which is scheduled to be closed before the summer, is another sign that the effervescence of transactions in the nursing home sector in Spain is continuing to peak.

Last year, three significant operations were closed: as well as the sale of Geriatros (to Pai Partners), SARquavitae purchased Novaire and the Spanish private equity fund Portobello took control of Vitalia Plus. So far in 2016, BBVA is immersed in a process to sell off Sanyres. And financial sources confirm that Gala Capital has begun the divestment of Geroresidencias La Saleta, a company that it inherited from the portfolio of Ahorro Corporación’s private equity manager.

The appeal of the nursing home sector, whose total turnover amounts to €4,000 million per year, is due to the rosy forecast for revenue growth that the accelerated aging population is causing and the shortage of available places in care centres for the elderly. The possibilities for consolidation that results from the fragmentation of this market is another significant factor that is stirring up the industry.

The Amma Group, with a staff of 2,800 professionals, manages 30 nursing homes and 27 day centres in Spain, with the capacity to serve more than 5,500 users across eight autonomous regions: Madrid, Cataluña, Navarra, Castilla y León, Castilla-La Mancha, the Canary Islands, Cantabria and Murcia.

Original story: Expansión (by Mamen Ponce de León)

Translation: Carmel Drake