Spire Healthcare

Hospital operator
Transaction value
€2,130 million
Aug 2007
Jul 2015

Cinven acquired BUPA’s hospital assets (since rebranded as Spire Healthcare) for a total consideration of £1.4 billion (€2.1 billion) in August 2007. In the first half of 2008, Spire acquired Classic Hospitals for £145 million and Thames Valley Hospital for £23 million. In 2010, Spire also acquired the London Fertility Clinic. The business now has 38 hospitals throughout the UK with 1,829 beds (18% market share) and approximately 10,900 employees. The hospitals are all high-quality, purpose-built facilities, many of which are the market leader in their local areas. The Company is expected to benefit from a number of favourable trends that underpin the UK’s private healthcare market including demographics and pressure on public health resources.

As an experienced healthcare investor, Cinven has identified a number of opportunities to improve operational efficiency as well as for organic growth at Spire. Cinven will be seeking to invest significantly in the operations and skill-sets within the business over the coming years in order to drive organic growth and broaden its service offering. This is particularly important in the context that Spire is a spin out from a much larger provident organisation which previously had little focus on cash and efficiency. Spire will also be seeking new sources of revenue through both its traditional private medical insurance customers as well as working in partnership with the NHS.

Cinven’s ownership has given Spire the freedom to grow as an independent company: local hospital directors now have increased autonomy which enables them to market more effectively and helps to re-align the business with local consultants’ needs. The management team have realised significant central cost savings and also synergies arising from the bolt on acquisitions. Cinven has supported Spire’s expansion within the UK through: i) the expansion of the portfolio arising from the acquisitions of Classic and Thames Valley and new build hospitals in Edinburgh and Brighton; ii) the development of new and existing facilities in areas such as theatre capacity and scanning equipment; and iii) the development of new service lines, for example with the innovative joint venture with Cancer Partners UK. Cinven continues to strengthen the management team, appointing a new Chairman, Garry Watts, and promoting Rob Roger from CFO to CEO, in April 2011.

In January 2013, Spire completed a partial refinancing of its loan facilities through a sale and leaseback of 12 of its 38 hospitals across the UK raising c.£700m. The proceeds of this transaction, net of costs, will be used to reduce bank debt. Proforma consolidated net debt will fall from approximately £1.4bn to £700m. In its most recent results, for the year ending 31 December 2011, Spire Healthcare reported EBITDAR of £188m and continued to grow strongly throughout 2012. Following the transaction Spire Healthcare will continue to operate from its 38 hospital sites, 18 of which are subject to long leases and 20 of which are freehold properties.

In July 2014, Spire completed its successful IPO on the LSE. Proceeds from the IPO were used to repay debt, leaving Cinven, post exercise of the greenshoe, with a 62% shareholding in the business. Cinven subsequently sold further tranches of shares in a strong after market and its final shares in June 2015.