September 15, 2010 / 3:55 PM / 7 years ago

Buyout firms line up for RBS's Priory sale: sources

LONDON (Reuters) - A handful of buyout firms are submitting indicative bids for mental-health specialist the Priory Group, which seller Royal Bank of Scotland hopes could fetch about 1 billion pounds ($1.55 billion), people familiar with the matter said.

Advent International, Bain Capital, Blackstone and Cinven were all planning to submit non-binding bids by Wednesday’s deadline, the people said.

The Carlyle Group and KKR have also examined the business, sources have said, but it was unclear whether they intend to lodge bids.

The private equity firms, RBS and the Priory all declined to comment.

The Priory operates more than 50 hospitals, schools and care homes in Britain. It is best known for treating celebrities including “Britain’s Got Talent” star Susan Boyle, Libertines singer Pete Doherty, and comedienne Ruby Wax, who went on to write a show about depression, dubbed “Live From the Priory.”

It is being sold as RBS sheds non-core assets to slim its unwieldy balance sheet.

Priory expects to generate earnings before interest, tax, depreciation and amortization (EBITDA) of about 95 million pounds in the year to December, a source previously said.

Banks would be willing to lend about 5.5 times that amount, the source said, leaving a private equity buyer to stump up about 500 million pounds in equity.

The business is viewed as a strong performer with a good management team, meaning a new private equity buyer may have little more to add to the business and could need to target lower returns, another source said.

Buyout firms usually target net returns of 20 to 25 percent, but have been prepared recently to put in more equity and accept lower returns for businesses they perceive to be low-risk.

(Editing by Louise Heavens)

$1=.6443 Pound

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