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UK — Private equity firm rumoured to be courting Pulse and possibly others, too

27 September 2010

The US private equity group Blackstone is in talks to acquire Pulse, the staffing agency for doctors, nurses and social workers, the Financial Times reports.

Pulse was bought more than a decade ago by private equity group HgCapital for 67 million Pounds. After running an abortive auction of Pulse last year, HgCapital is now preparing the company for a potential 100+ million Pounds initial public offering (IPO) in 2011. As well as the UK, Pulse operates in Australia, New Zealand, the Middle East, US and Canada.

The Financial Times believes that if Blackstone is successful, the venture capitalist firm will combine Pulse with rival healthcare recruitment agency ICS bought for 130 million Pounds from its private equity owners in June this year. All parties have declined to comment to the Financial Times.

The Financial Times believes that Blackstone sees an opportunity to consolidate the healthcare staffing sector, which it estimates is worth about £1bn in annual revenue, to create a healthcare staffing market leader.

In 2005, Blackstone acquired Teamhealth, the largest provider of outsourced physician staffing and administrative services to healthcare providers in the US. Blackstone also owns Southern Cross in the UK, the fourth largest provider of residential and nursing long-term care for both the elderly and enduring mental health patients.

Another business that Blackstone may seek to buy is Healthcare Locums, the London-listed group, which has published negative growth results today for H1 2010 (see above). Healthcare Locums has a market capitalisation of 170 million Pounds.

The elderly care group Housing 21 is also rumoured to be trying to sell Complete Care, the domiciliary care business, which supplies care professionals for victims of spinal or brain injuries.

These moves come at a time when the UK government has decided to sell its loss making in-house staffing agency NHS Professionals, which was set up by the former labour government to stop the National Health Service (NHS) being overcharged by private staffing agencies.

Edward Lethbridge, Director at investment back advisory boutique Lincoln International, told the Financial Times "there is a lot of demand for defensive recruitment businesses in healthcare and if private equity can get over the political risk of government cutbacks they can be comfortable with investing."



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