CASA REHA Group (Germany) - Dec 2007

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01 December 2007

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HgCapital has acquired a majority stake in Casa Reha Group from Advent International and the management for an undisclosed amount. Both Advent International and the management reinvested in the company and retain substantial minority stakes. The deal was sourced through an auction run by Rothschild investment bank, represented by Dominic Hollamby. HgCapital cited its attractive offer and experience in the healthcare sector as central to winning the deal.

The company is seen as being attractively positioned in a highly-fragmented market. The importance of private healthcare suppliers is on the increase, as they continue to grow faster than other suppliers which are run by the state, communities or charities. The company also has a number of attractive transactions in the pipeline, such as the opening of newly-built care homes and agreements to build further homes. The investor plans to grow the business both organically and through further acquisitions.

In 1999, Chase Capital Partners (now JP Morgan Partners) and German Equity Partners (the fund advised by H&P Beteiligungsberatung, Frankfurt) invested €15m in Casa Reha, acquiring a substantial minority stake. The majority of Casa Reha’s equity was held by its US parent group Covenant Care Inc, itself an investee of Chase Capital Partners. (January 1999, page 9). In 2001 the financial investors acquired a joint majority stake in the company via a capital increase (November 2005, page 29).

In September 2005, funds advised by Advent International acquired Casa Reha in a secondary management buyout. JP Morgan Partners and German Equity Partners, had held a minority stake in the company since the end of 1998, while Covenant Care International Inc, which also exited its stake, held the majority of equity in Casa Reha (October 2005, page 28). Under the stewardship of Advent International, Casa Reha acquired fellow nursing home group Unternehmensgruppe Sozialkonzept GmbH (March 2007, page 9).

Debt

Financial details were not disclosed.

Company

Casa Reha, headquartered in Oberursel, operates nursing homes and was founded in 1995 by Covenant Care International Inc. The company manages 48 institutions in Germany with a total of 7,000 beds, and is Germany’s fifth-largest player in the nursing home management market.

Exit deal

Under the ownership of Advent International, the company grew organically, new care homes were opened and new locations were found. During 2007, there were four additional care homes in the pipeline, in 2008, the company expects to open more than that. The team was expanded, focusing on finances, operations, and expansion. The investor also made add-on acquisitions, such as Unternehmensgruppe Sozialkonzept, which was sold as part of a succession plan. The vendor stated that there was still considerable growth potential for the new owners to pursue.

People

Georg Stratenwerth handled the transaction for Advent International, while Philipp Schwalber represented HgCapital.

Advisers

Equity - Bain & Company, (Commercial Due Diligence)Equity - Clifford Chance LLP, Angela Dobel, Burc Hesse, Christian Trenkel, Jan Möller, Jana Bartosch-Koch, Joachim Hasselbach, Nicole Engesser Means, Silke Gantzckow, Sr Peter Dieners, Wolfram Wormuth (Legal)Equity - Clifford Chance LLP (Dusseldorf), Jan Möller, Jana Bartosch-Koch, Marc Besen, Maria Nina Heil, Roland Schwensfeier, Sr Peter Dieners (Legal)Equity - Deloitte, Axel Kroninger, Frank Morris, Guy Street, Roland Berger, Ursula Brueggemann (Financial Due Diligence)Equity - FERBER & CO. GmbH, (Corporate Finance)Vendor - Ashurst, (Legal)Vendor - Rothschild, Dominic Hollamby (Corporate Finance)Vendor - Willis , (Insurance Due Diligence)