French elderly care group Emera, which was among a wave of overseas investors to enter the Irish nursing sector in recent years, is exploring a sale of its 70 per cent stake in Virtue Group, the residential and home care company, sources have said.
Emera has hired Goodbody Stockbrokers to sound out potential buyers of the stake, the sources said. It was acquired in late 2020, for an undisclosed sum, and preceded a period of significant expansion that has turned the group into one of the largest nursing home operators in the State, with about 1,300 beds over 13 properties.
The company has also diversified, by acquisition, into home care services, with 3,000 clients on the books of three units, according to its website.
Virtue was founded by former professional rugby player Cillian Wilis and his brother, Ronan, whose family was in the nursing home business. The Willis brothers, cousins of former rugby international Brian O’Driscoll, plan to retain their 30 per cent stake in Virtue and continue to grow the business, potential bidders have been told.
A so-called teaser document distributed to potential interested parties says that a buyer would need to commit €134 million by way of equity investment.
Efforts to secure comment from Emera, Virtue and Goodbody were unsuccessful.
A deal would mark the first major market exit one of the number of overseas nursing home operators, often backed by private equity money, that have entered the Republic in the past five years. Fourteen large private operators now account for 40 per cent of the almost 32,000 nursing home beds in the State, following a wave of consolidation, the Economic and Social Research Institute (ESRI) said in a report published earlier this week.
However, profit margins in the nursing home sector have been squeezed in recent years as increases in bed rates from the Fair Deal scheme, where the State pays much of the cost of nursing home care for patients, have not kept pace with a surge in running costs, particularly for heating, food and labour, amid widespread inflation.
Some of the recent, mainly French, entrants to the sector have been particularly affected as the nursing homes have been sold separately to European property companies and then leased back. Rent increases are generally linked to inflation. The cost of debt used by new entrants to acquire assets in the market has also increased as central banks hiked official rates in the past two years.
Acquirers of Irish nursing home businesses in recent years include: Paris-based Orpea, which required a bailout from the French state last year in the wake of a scandal over residents’ mistreatment in its home market; French investment fund InfraVia Capital Partners; and French care homes operator DomusVi.
The latest financial report for VIEC Holdings, a parent company of Virtue, shows the business’s pretax loss widened to €2.45 million in 2022 from €1.49 million in 2021, even as turnover more than doubled to €104 million. The increase in revenues came as Virtue added new nursing homes and acquired home care businesses. The teaser document predicted that turnover would top €136 million in 2023.
Virtue consisted of the exclusive Fern Dean and Four Ferns nursing homes in Blackrock and Foxrock in South Dublin, and Moorehall Lodge and Moorehall Living in Drogheda and Ardee, Co Louth at the time of the Emera investment in late 2020.
Emera subsequently backed Virtue’s deal in March 2021 to buy SingaCare, a nursing home group in the southeast of the country. The underlying properties used by the group are owned by property funds run by Paris-based Euryale Asset Management and Belgian real-estate investment trust Aedifica.
Virtue is developing a 14th nursing home in Stepaside in south Co Dublin, which is expected to open this year.
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