Attracted by the prospect of solid returns, banks and family offices are increasingly focusing on real estate linked to healthcare and care homes, according to Jacques Berger, partner at DEFI Gestion, the Swiss private equity house.
He says that Credit Suisse is active in the market. ING has a healthcare property fund, as does AXA. Berger says family offices remain keen to invest in the sector.
DEFI Gestion, Sinequanon and Luxempart have just invested a further tranche of €20m in DS Care, a company set up to buy care homes in Italy and Germany, taking the total to around €25m. Berger says that the total investment could reach €100m, with other external investors coming in: “It is a sort of mini-fund,” he told Healthcare Europa.
DEFI has been investing in the care home sector for 5-6 years in France with another, separate, venture, Emira.
Berger says that, historically, private equity groups seeking an annual investor return of 35% have not been interested in the care home market. But he says that might change: “Today, an IR of 10-20% looks very appealing.”
Berger says DS Care has bought three small care homes in Italy, and is about to make further acquisitions, which could take the total to 1,000 beds in 2009. He likes the Italian market because the per capita bed ratio is 1.3 beds per 100 persons aged 65+, compared to a European median of 5.9 beds. This leads to large capacity needs in a market where bed growth is regulated, thus creating significant entry barriers.
DS Care is a Luxembourg based company set up in early 2008, backed by Luxempart and DEFI, and advised by Sinequanon Capital Partner. Sinequanon is a Paris based investment management advisory company, lead by Daniel Caille, board member of DomusVi. Domus Vi is the fourth largest French care home player, with 120 homes and 7,000 employees in France and Canada.
Caille is a former chief executive of Générale de Santé and Dexia Crédit Local. Berger says DS has a good team on the ground in Italy: “We are buying small homes with good management teams. We aren’t interested in buying larger groups.” He says that, in Lombardy, care home clients tend to pay half the money themselves, with 50% paid by the state. He says that care home prices have already dropped from 10-12 times EBITA to 7-10 times.
Sinequanon is a specialist investor in healthcare infrastructure.
