Round Hill Capital is in advanced talks to buy a majority stake in HC-One, which could result in acquiring the entire business for £1bn.
HC-One, one of the largest care home providers in Britain, was put up for sale with a £1bn price tag in May 2018.
Round Hill is now engaging with potential debt providers on providing support on an equity deal for the business.
It is understood the investment firm is aiming to source a £550m whole loan to fund its purchase. It may ultimately either choose to line up debt arrangements as part of the deal, or refinance after an acquisition.
Round Hill is the only party currently in detailed discussions to take up equity, however it may also decide to bring in a partner on the deal in the coming weeks.
Last year it teamed up with TPG Capital, KKR, Ivanhoé Cambridge and Starwood Capital on separate student housing and residential ventures in Europe.
HC-One, which operates 351 care homes in England, Scotland and Wales, was set up by former Labour Party donor Chai Patel in 2011 after the collapse of Southern Cross Healthcare.
Patel’s management company, Court Cavendish, is among a consortium of investors that owns HC-One, which also comprises HCP, Formation Capital, Safanad and StepStone Real Estate Partners.
Notably, HCP announced its intention to exit its UK holdings last March. In 2014, HCP had provided a £394.5m loan facility secured against HC-One’s parent company NHP, on a five-year term.
Last year it formed a joint venture with an unnamed institutional investor to sell 51% of its interest and third-party property-level debt in its £394m UK holdings.
It has the ability to sell its remaining 49% by no later than 2020.
However, it is thought that Patel is interested in retaining a stake in HC-One.
If a deal goes ahead, it would mark a significant foray into the healthcare sector for Round Hill, which has a track record of investing in residential and student accommodation assets across Europe. It currently manages around 65,000 residential units and student housing beds in eight European countries.
Dyal Capital Partners, a division of investment manager Neuberger Berman that buys minority equity interests in institutional alternative asset managers, bought a minority investment in Round Hill In July.
HC-One declined to comment on the potential deal, saying: “It is our policy not to comment on market speculation. Our number one priority, every single day, will always be the health, safety and wellbeing of the residents we support.”
Round Hill declined to comment.
Court Cavendish did not respond to requests for comment.
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