Active Care Group, a company owned by private equity that cares for hundreds of vulnerable patients for the NHS, has narrowly avoided going out of business. After months of escalating financial difficulties, an administrator was appointed 29 May 2024, who immediately sold the company’s assets in what is known as a ‘pre-packaged sale’ to avoid the company being liquidated.

The sale for over £62mn was to Gadwall Holdings Ltd, a new company set up specifically by Sequoia Economic Infrastructure Income Fund (SEIIF) to acquire Active Care Group (ACG) assets. SEIIF is an affiliate of Luxembourg-based Sequoia IDF Asset Holdings S.A. Sequoia was already a shareholder in ACG, but now becomes the leading shareholder.

The appointment of an administrator and the sale comes at the end of many months of failed negotiations between shareholders and lenders to try and ensure the survival of the company via restructuring and more loans. The company had been in financial difficulties since the end of 2022, according to the administrators report.

ACG is one of the leading providers of inpatient mental health care in the UK as a result of its 2021 acquisition of the Huntercombe Group, and also provides specialist care services to people with complex conditions including acquired brain injury, acquired spinal injury, neurological conditions, and learning disabilities. Income, which from April 2021 to September 2022 was £230.8mn, is primarily from NHS contracts.

In May 2024, NHS England finally heard of the financial difficulties, although as already noted ACG’s financial difficulties began at the end of 2022. NHS England immediately put a stop to ACG taking any new resident patients and ordered ACG to provide daily updates on the situation.

The report from the administrators notes that the action by NHS England meant that the directors of ACG felt it would be too challenging to continue trading after the end of May and not viable to try and sell the company “with the uncertainty of the situation very likely to lead to further destabilisation.”  Therefore the administrators were appointed.

Despite the level of company debt, The Independent reported that it had seen company proposals for four directors to take bonuses totalling £1m between them. When questioned by the publication, ACG confirmed that bonuses were agreed for two directors.

The Independent also saw emails which highlighted how patients would have suffered had ACG not secured the new deal.

“One email seen by the publication dated 16 May, had ACG chief executive Keith Browner say: “The Group continues to [hurtle] towards a liquidity crisis without the benefit of an agreed and deliverable solution. We will be reviewing every payment made to suppliers and creditors and withholding payment where lack of supply/service will not result in immediate harm to patients… In the second phase, we will begin to withhold payment for necessary goods and services including food, drugs and agency staff. During that phase, we will also be obliged to inform commissioners and the NHS that we are no longer in a position to safely provide care for patients.”

Fortunately for patients at the company’s hospitals the second phase was not reached, but the situation highlights how precarious a position companies owned by private equity can be in. The administrators report gives some insight into how the company ended up in such a terrible financial position. 

ACG was owned by Montreux Healthcare Fund, a private equity investment fund based in the Isle of Man, a tax haven, administered by Montreux Capital Management UK (MCM UK). 

Since 2018 ACG had been acquiring companies, increasing its annual turnover from about £49mn in March 2018 to £192mn by September 2023.

As is common practice in private equity, these acquisitions were funded largely by debt, which increased the group’s total debt from £36mn in March 2018 to £175mn by April 2024. One of the company’s largest acquisitions was in March 2021, when Montreux Capital Management UK (MCM) acquired The Huntercombe Group (THG) and merged it with ACG. Financial difficulties began in late 2022. Huntercombe Group itself was once part of Four Seasons Health Care Group, once the UK’s largest independent elderly and specialist care provider, but which due to spiralling levels of debt went into administration in 2019.

The Huntercombe Group added 11 specialist hospitals, which increased the Active Group’s locations to 58. 

Although ACG has now been technically ‘saved’ by the ‘pre-packaged’ sale of ACG assets it continues to be owned by private equity funds. As a result, what is best for private equity fund investors will always take precedence over what is best for patients and staff.

The company also continues to be in a difficult position financially and as a result of investigations by The Independent and Sky News that began in 2022, it is also facing numerous legal actions stemming from abuse at Huntercombe hospitals. 

ACG faces at least 54 individual clinical negligence claims, from patients treated in several of the Huntercombe hospitals, now owned by ACG, following investigations that revealed allegations of “systemic abuse”. Allegations include, inappropriate and unnecessary forced feedings and physical restraint; false imprisonment, and breaches of the Human Rights Act including prohibition of inhuman and degrading treatment.

According to court documents, ACG appears to be arguing that when they bought the Huntercombe Group legal liability for such clinical negligence claims was not transferred – the legal representative for the claimants is arguing that it was and ACG will be liable.

ACG is not the only company that has contracts with the NHS that is owned by private equity for more details see our website page.

Dear Reader,

If you like our content please support our campaigning journalism to protect health care for all. 

Our goal is to inform people, hold our politicians to account and help to build change through evidence based ideas.

Everyone should have access to comprehensive healthcare, but our NHS needs support. You can help us to continue to counter bad policy, battle neglect of the NHS and correct dangerous mis-infomation.

Supporters of the NHS are crucial in sustaining our health service and with your help we will be able to engage more people in securing its future.

Please donate to help support our campaigning NHS research and  journalism.                              

Comments are closed.