Identify
In 2006, Apax Funds became the third private equity
group since 1997 to own General Healthcare Group - so what was the
company's attraction for us and what did we think we could bring to
it that the previous investors had missed?
At the time of the investment, General Healthcare Group was the
largest hospitals network in the UK and was already viewed as a
very strong, very successful business in a growing market but with
defensive characteristics. GHG led the way on every parameter that
could be looked at - hospitals, beds, theatres, reputation and
operating margins.
Complementary expertise
For the Apax team, the only reason for us to invest in the business
would be if we could do something different. For us, the path to
releasing the long-term potential of the business lay in building a
consortium whose expertise complemented ours.
With that in mind, in 2005 Apax Funds partnered with Netcare,
L&R and Brockton, in anticipation of a sale of General
Healthcare Group. As the leading operator of private hospitals in
South Africa, Netcare's role would be to bring operational
excellence in managing hospitals. L&R and Brockton would help
to release value from GHG's property portfolio, while the Apax
team's contribution would be their international outlook on the
sector as well as their expertise and relationships in the
financial arena.
Support
The consortium's aim for the company was for it to
become the first choice for patients because of the location and
quality of its facilities.
Since the acquisition, the company has increased the number of
hospitals that it manages from 49, at the time of the investment,
to over 60. Today, about 90% of the UK population lives within an
hour's drive of one of GHG's hospitals, making it unique in terms
of scale and national footprint.
Quality and efficiency
As an owner of other hospital groups worldwide, Apax has also had a
part to play in helping the management team benchmark themselves
against global best practice in the sector. The Apax team has
supported management in driving operational efficiency and quality
across all aspects of the business. This has included sharing ideas
on recruitment and incentivisation of doctors, delivering clinical
excellence, nursing and procurement initiatives.
Realise
Soon after the acquisition, the consortium separated
GHG's operating assets from the property assets and helped to
create a structure which would facilitate the disposal of property
assets when the market conditions were right.
With a stabilisation of the property market, several potential
options, including property sales, are being explored to generate
value.
The Apax team has also worked with Netcare and the other
shareholders to identify and agree on the most important issues in
an exit process, and led early work in exploring an initial public
offering.