* String of private equity firms said to prepare bids
* Priory owners hoping for 10 or more times EBITDA
* Sale follows scrapped IPO earlier this year
(Adds other possible bidders, background, valuation)
By Quentin Webb and Simon Meads
LONDON, Aug 24 Royal Bank of Scotland (RBS.L)
has begun the sale of mental-health specialist the Priory Group,
which it hopes could fetch about 1 billion pounds ($1.54
billion), people familiar with the matter said on Tuesday.
RBS, which is being advised by Rothschild [ROT.UL], has
given bidders until mid-September to submit indicative offers,
the people said. RBS abandoned plans to list Priory earlier this
The Priory operates more than 50 hospitals, schools and care
homes in Britain. It is being sold as RBS sheds non-core assets
to slim its unwieldy balance sheet.
The group is best known for treating addictions, eating
disorders and depression, with celebrities and rock stars
regularly reported among clients at its flagship clinic in
Roehampton, in leafy southwest London.
A slew of private equity firms, including Advent
International, Bain Capital, Blackstone Group LP (BX.N), The
Carlyle Group [CYL.UL], Cinven [CINV.UL] and KKR [KKR.UL] are
preparing bids, the people said.
Other private equity suitors could include Apax Partners
[APAX.UL], which is already heavily invested in British
healthcare, Charterhouse [CHCAP.UL], and CVC [CVC.UL], some of
the people added.
A sale at about 1 billion pounds would represent a little
more than 10 times this year's earnings before interest, tax,
depreciation and amortisation (EBITDA).
A buyer would probably have to inject about half that
Priory expects to make about 95 million pounds EBITDA in the
year to December, one of the people said, with banks willing to
lend about 5.5 times that for a deal, implying a bidder would
have to find 500 million pounds.
RBS declined to comment. A Priory spokeswoman declined to
comment on the sale, saying the group was "focused on the
day-to-day running of the business". The private equity firms
either declined to comment or were not immediately available to
(Editing by Douwe Miedema and Will Waterman)