NEW YORK (AFX) - Private-equity firm Behrman Capital LP said Wednesday it has sold portfolio company Tandem Healthcare to JER Partners and Formation Capital Corp. for $620 million.
Behrman Capital, based in New York and San Francisco, first invested in Tandem Healthcare in 1998 when the company owned just six long-term care facilities in Florida and Pennsylvania. It now owns or manages 77 facilities across 12 states and has diversified into ancillary services such as mobile diagnostic imaging and pharmacy and hospice services.
'Annual revenue has grown from $25 million to some $600 million and as a result of the sale Behrman Capital will receive a $282 million return on its total $77.5 million equity investment,' managing partner Grant G. Behrman said in an interview.
The health-care sector, one of four areas on which Behrman Capital focuses, continues to be very attractive to private-equity investors. An aging population, reduced U.S. government spending and a highly fragmented market make for plenty of investment opportunities, especially in the building of consolidation and acquisition platforms such as Tandem Healthcare.
The company's new owners, JER Partners and Formation Capital, plan to restructure Tandem Healthcare into an owner of nursing and other housing facilities for seniors. Meanwhile, the operating part of the business will be leased to a newly formed vehicle which will pay rent to the owners.
JER Partners and Formation will be able to use the rental payments to finance their lending for the deal.
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