Among Spain''s largest independent healthcare providers, USP Hospitales, will become a portfolio company of the UK private equity firm Cinven Ltd, which is acquiring it for €675 million ($920 million / Rs3,876.52 crore), beating at least two other bidders for the business, which last year reported revenues of €246.7 million.

USP is Cinven''s second deal in Spain since 2000, after it took part in the €4.3 billion-acquisition of Amadeus Global Travel Distribution in 2005, Spain''s largest leveraged buyout.

Cinven will acquire the 70-per cent stake in USP Hospitales, currently owned by Mercapital, Spain''s biggest domestic private equity firm. USP management may try to increase its existing stake of 20 per cent in the business, while Portuguese financial group Grupo Caixa Geral de Depósitos may be willing to retain the 10-per cent stake it took in USP in exchange for selling it a 25-per cent holding in its Lisbon-based healthcare subsidiary Hospitais Privados de Portugal, a deal that closed last month.

In June Cinven had acquired 25 hospitals from British health care provider BUPA for £1.44 billion ($2.90 billion / Rs11.77 crore).Cinven also owns Partnership in Care, which provides services to mental health patients.

Cinven does not expect any synergies between the Spanish and the UK operation, barring an exchange of best practices

USP Hospitales operates 13 hospitals and 16 outpatient centres and has a strong presence in Madrid and Barcelona and a focus on six specialties including internal medicine and general surgery. It also has about 2,000 physicians under contract.

Cinven said USP expected to generate €280.7 million of pro forma revenue in 2007, a 14-per cent gain from 2006, and earnings before interest, taxes, depreciation and amortisation of €47 million, a 26 per cent gain from the year before.

Mass immigration in recent years has placed a strain on Spain''s public health system, encouraging a steady exodus of middle- and high-income patients to the private sector. Accordingly, analysts are positive about the long-term prospects of the business as governments increasingly seek low-cost high-quality alternatives to publicly provided hospital care.

Gabriel Masfurroll, chairman and chief executive, USP Hospitales, said, "Private healthcare provision and insurance is only in its early stage of development in the Iberian region which is why it provides such a strong commercial opportunity."

"The Spanish national health service is under huge pressure to deliver quality service on time'' said Simon Rowlands, partner, Cinven. "With waiting lists expanding rapidly there is nothing other than a positive view of private healthcare schemes."

Cinven disclosed that it planned to expand USP Hospitales with acquisitions in Spain and other international markets, as well as invest in growing existing operations including the flagship Dexeus unit which is due to open in Barcelona later in July.

The transaction requires the approval of the competition authorities.

The Spanish-language newspaper La Vanguardia reported that Mercapital had been prompted to sell early due to the speed with which the hospital group had increased its figures; USP has nearly doubled its sales, from €120 million in 2004 to €230 million in 2006, and boosted its EBITDA from €19 million in 2004 to €40 million in 2006.

Mercapital has helped build USP by acquisition, to create a chain of 32 health centers, including 13 full-scale hospitals. USP has also invested €20 million to €30 million in acquisitions in Morocco.

Mercapital had bought 65 per cent of the business in 2004 for an enterprise value of €217 million and the USP Spanish management bought the 20 per cent that it still holds from Texas-based hospitals operator United Surgical Partners International Inc, retained 15 per cent-stake.

UBS, which advised USP in 2004, is again advising the company management on the deal with Cinven.