RBS takes care of nursing home giant in £1bn buy-up
The deal involves RBS buying 294 of Southern Cross's 573 properties from owners Blackstone, the US private equity group, although Southern Cross will continue to operate the sites under 20-year lease agreements while paying rent.
Southern Cross is the UK's largest provider of residential care homes and runs a number of sites across Scotland, including Bonnington in Edinburgh, Tranent Care Home and Springfield Bank in Bonnyrigg.
No-one from RBS could confirm the deal or provide any further details this morning.
Southern Cross is expected to float on the London Stock Exchange later in the year with an estimated value of up to 500 million.
Blackstone built the homes portfolio through a number of quickfire deals in recent years.
It originally bought Southern Cross for 162m in September 2004 from West private equity before buying Ashbourne Group for 85m from Electra Partners shortly afterwards. Finally, it paid around 560m to buy publicly-listed NHP in November 2004, in a move which made it the UK care homes leader - ahead of Bupa - with more than 28,000 beds across 573 sites.
The nursing home sector has seen a buzz of consolidating activity in recent months, with Bupa, Four Seasons and Barchester Healthcare - owned by Irish tycoons John Magner and JP McManus - all snapping up rivals.
According to healthcare analysts, buyers have been attracted to the sector because of the increasing old age profile of the UK, the stability of the sector and increased Government spending.
And while any further rapid consolidation in the market could eventually attract the attention of competition regulators, the sector still features a sizeable number of smaller operators, sector watchers said. Despite Southern Cross being the UK's biggest care home provider, it has only six per cent of the market.
Meanwhile, RBS today played down reports of a multi-million internal fraud at state-owned Bank of China, in which it invested almost 1bn last year.
An RBS spokeswoman said the Scottish bank was aware of the reports but said "this is a matter for them". RBS said it had "appropriate warranties and protections" in place for investors.
That view was backed by Zhou Xiaochuan, the BoC's governor. "The Bank of China should be responsible for the losses if they can afford them," he said. He also said it was "too early" to say if the matter would have any impact on the BoC's planned stockmarket listing. "We need to see how the case will affect the bank's financial results," he said.