3i and funds controlled by 3i have sold its majority stake in Ambea for a price which valued the group at €850m. 3i says this equates to 10 times 2009 SEK748m EBITDA and 9 times prospective 2010 earnings.

The group includes care home and domiciliary care group Carema in Sweden and hospital and clinic group in Sweden. 3i tried and failed to sell it to private equity groups in May 2008 when a target price tag of €900m was reported by Bloomberg, so this looks close to pre-crash levels. It has managed a 3.5 times return on assets bought from 2004 onwards.

The high price reflects recent growth. In 2009 sales grew 23% to SEK7.3bn with organic growth at 19% - nearly twice as high as Ambea's 10% long-term growth target. Much of that sales growth came from big contracts as Swedish authorities outsource primary, domiciliary and care homes to the private sector. 

Ambea claims that its strength lies in the width of its platform. In Finland its Mehiläinen business is the largest hospital chain. In Sweden, Carema is one of the two largest care home, domiciliary and primary provider. It also has a small operation in Norway. The strategy has been to seek to cross fertilise the two businesses. Thus, in Sweden, Carema has been trying to build the brand strength that Mehiläinen enjoys in Finland – this will be increasingly important as patients in the Swedish public healthcare system start to choose their provider. In Finland, Mehiläinen has been trying to build a care home and domiciliary arm to match Carema’s in Sweden, although it has faced tough competition from MedOne.

Ambea has been looking beyond Sweden and Finland, but chief executive Ralph Riber says that there remains huge potential in the domestic markets. Private healthcare and care remains only around 10% of the market in Sweden. Some 85% of the care home market remains public sector. 

This autumn’s elections in Sweden could prove pivotal and currently the left is slightly ahead. But Riber says he would not expect a win by the left to quash growth prospects. He argues that the movement to outsource care to the private sector and, above all, to offer patient choice is not politically controversial and suggests that the momentum is such that is can not now be stopped: “20 of the Swedish counties have moved to a model where they offer the patient free choice of primary care. This has gone beyond outsourcing now.”

He differentiates between acute hospitals which he says in Sweden it would be politically unacceptable to privatise and sectors such as care and primary care where he says private involvement is not very controversial.

Riber says he is glad that Ambea did not enter the Danish market last year. There, the public health authorities reintroduced choice for patients waiting more than four weeks, but reduced payment and made referrals more complex.

His colleague, Matti Bergendahl, who runs Mehilainen, says that whilst GDP has dropped “5-7%” the impact on Mehilainen has been very slight and that the group still saw double digit growth. He expects patient choice to come to Finland as well eventually.

3i's Tomas Ekman who heads up healthcare buyouts in Europe and Asia confirmed our story that Ambea was about to float before the Triton sale came along. He says that private equity is on the increase as bank lending grows. He added: "For acquisitions like this you can now get 4.5-5 times senior debt with mezzanine taking that to six times. These are the levels of 2004."