Palatine buys majority stake in KCP-backed Routes Healthcare

Harriet Matthews
21 June 2021

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Palatine Private Equity has acquired a majority stake in homecare health service provider Routes Healthcare from Key Capital Partners (KCP).

KCP will retain a minority stake in the business, alongside founder Andrew Healing.

The deal is the fourth platform investment from Palatine Private Equity IV, which held a final close in May 2021 on £220m, as reported by Unquote. The GP invests around £10-30m per buyout deal, targeting lower-mid- and mid-market companies based in the UK.

Shawbrook provided debt financing to support the buyout.

Palatine intends to support the company to open new sites, and will help take advantage of M&A opportunities in the sector. The GP also said in a statement that Routes' focus on the wellbeing and professional development of its staff is a key part of its investment from an ESG perspective.

Andy Lees and Tom Wildig from Palatine will join Routes's board.

Unquote sister publication Mergermarket reported in February 2021 that KCP had appointed Grant Thornton to manage the sale process, with the company to be marketed based on EBITDA of £4m. Bids were expected to be in the 9x EBITDA range, one source said.

KCP invested £4m in Routes for a minority stake in April 2016. The GP invested via Key Capital Partners VIII. Routes was the first platform investment from the vehicle. Which held a final close in November 2016 on £65m. The fund invested £3-15m per deal, targeting MBOs and expansion deals.

During the investment period, KCP assisted the company with the opening of nine new branches, as well as the development of its management.

Company
Founded in 2005, Routes is a homecare provider that cooperates with local authorities and NHS Clinical Commissioning Groups (CCG), providing at-home care for patients including those with spinal injuries, brain injuries and learning disabilities. Routes is headquartered in Macclesfield and has 14 branches. It employs 120 operational and management staff, as well as 1,000 carers.

Routes generated revenues of £21.7m in 2020, versus £14.7m in 2019, according to its publicly available accounts.

People
Palatine Private Equity – Andy Lees (partner); Tom Wildig (investment director).
Key Capital Partners – Mike Fell, Philip Duquenoy, James Excell (investment partners).
Routes Healthcare – Jackie Lindsay (CEO).

Advisers
Equity – Clearwater International (corporate finance); Grant Thornton (debt advisory); KPMG (financial due diligence); Fluid IT (IT due diligence); Gately (legal).
Vendor – Connell Consulting (commercial due diligence); Grant Thornton (corporate finance); Ward Hadaway (legal).
Management – Park Place Corporate Finance (corporate finance).