A management buy-in team led by Dr Magdy Ishak and backed by Phoenix Equity Partners (“Phoenix”) has acquired the Abbey Hospitals Group (“Abbey”). They have formed a new company, Covenant Healthcare Limited (“Covenant”), to effect the purchase.
Phoenix, a leading private equity firm, and the management buy-in team provided the equity funding for Covenant. Bank of Scotland Corporate Banking provided the senior debt. Joanne Hartley and Andy Powell led the PricewaterhouseCoopers Corporate Finance team that originated and advised on the deal.
Abbey has a portfolio of six private hospitals and other medical facilities in the UK. Two of the hospitals are based in Ayr and Stirling, Scotland, with the remaining four located in Carlisle, Barrow, Gisburn and Liverpool in the North of England. The six hospitals deliver a full range of acute medical services to self-paying, insured and NHS waiting list patients.
Phoenix and the Covenant management team plan to build upon the acquisition of Abbey and use it as a platform to create a healthcare group concentrating on private hospitals and acute psychiatric facilities. They plan to extend some of the existing facilities in order to increase the number of patients that can be treated. Covenant also intends to acquire and develop new hospitals and psychiatric units elsewhere in the UK.
Dr Ishak, Chief Executive of Covenant, has an impressive track record of patient care and value creation in the healthcare sector, having founded and built up the ScotCare Group Limited which was sold to CrestaCare plc in 1994. Dr Ishak subsequently led the sale of CrestaCare plc to venture capitalists in 1999. The other members of the management buy-in team are James Ramsay, Finance Director, formerly FD of CrestaCare plc and Ian Richardson, Corporate Development and Legal Director, formerly Head of Private Equity at Eversheds. Andrew Richmond will also join as non-executive director. He will bring a wealth of knowledge having been a healthcare analyst at both UBS Phillips & Drew and Collins Stewart for a total of over 10 years.
Dr Ishak said: “This is an exciting opportunity to create and forge a dynamic healthcare group throughout the UK which will deliver a wide range of acute medical and psychiatric services in a rapidly changing and expanding market sector."
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.”