April 2007
MML Capital Partners ("MML"), the mezzanine and private equity firm, today announces that it is investing £18 million for a minority equity stake in The Regard Partnership Limited (“Regard” or “the Company”). Regard is a residential care provider for people with permanent learning difficulties (“PLD”). Senior debt facilities for the transaction are being provided by Bank of Scotland Corporate.
This is the third investment from MML's fourth fund and is in line with MML's strategy of focusing on investments where it can provide flexible, cost effective financing through a combination of mezzanine and equity.
This transaction illustrates how MML provides an alternative solution to traditional private equity.
Regard is a leading provider of residential care and support for adults and children with permanent learning difficulties. The company also provides services for adults with enduring mental health problems or an acquired brain injury and operates a care
home with a 52-week residential school service for children who experience emotional and behavioural disorders. It owns and/or manages over 100 properties throughout England and Wales with approximately 700 beds. Regard specialises in the provision of high quality, individually tailored care packages and works with Local Authorities across the country.
The Company was founded in 1994 by two mental health nurses, John Farragher and John Webster, who remain joint Managing Directors and will continue to lead the management team. Bal Johal, a Director of MML will join the Board and work alongside the existing team which includes non-executive Chairman, Roger Storey who built Ridgmont Care Homes from start-up in 1995 to a £90m business when sold in 2005.
Investment Rationale
Regard has grown strongly in recent years through a combination of organic growth and acquisitions. Management sees an opportunity to continue their proven expansion strategy. This refinancing funded by Mezzanine Management and Bank of Scotland Corporate provides further capacity for Regard to continue to grow. In addition the investment provides an exit for existing investors Bowmark.
Bal Johal and Ian Wallis Directors at Mezzanine Management led the transaction. Commenting on this investment, Bal Johal, Director of Mezzanine Management, said: “Regard is an excellent business – its founders have over 50 years of industry
experience and have built the business by focusing on a commitment to quality care for their service users. The have also added an excellent management team around them, led by Eugene Hayes and Michael Hawkes. We see significant growth potential through the development of new homes, extensions and further acquisitions and an ongoing requirement for specialist quality care facilities”
John Farragher, joint Managing Director of Regard, added: “The requirement for long-term care provision for people with learning disabilities remains. At Regard, we have built up a long-standing and in-depth understanding of this market and the care requirements for adults and children with a variety of complex needs. We are proud of what our team has achieved to date but see further significant opportunities in this market. We chose to work with Mezzanine Management because they listened to and understood what we wanted to achieve, then structured a deal to help us do that.”
This transaction follows a strong six months for Mezzanine Management during which it has made five highly significant exits realising circa €200m. Advisers to Mezzanine Management were Pinsent Masons, Birmingham (legal advice – led by Joanne Ellis) and PricewaterhouseCoopers, Birmingham (corporate finance – led by Andy Parker). Both were retained because of their specialist sector knowledge.
Management’s advisers included Equita Corporate Finance (Chris Spanoudakis) and DLA, Birmingham (legal advice – led by Jim Lavery).