RBS lines up float for celeb clinic group The Priory

By MARK FOXWELL
Updated:

The Priory, the chain of clinics best known for treating celebrities such as Robbie Williams and Kate Moss, will appoint banks this week to float the business for an expected price of £1.3 billion - a move which will see taxpayer-owned Royal Bank of Scotland boost its shareholding in the group.

The move is expected to bring a windfall of more than £100 million for shareholder Lord Ashcroft, the Conservative Party chairman whose tax affairs have attracted controversy.

The door to these latest riches is being opened by RBS, which is the rehab clinic chain's biggest investor and is negotiating to slash its £1 billion debt in return for increasing its shareholding from 45 per cent to 75 per cent.

The Priory

Recovering alcoholic Ed Mitchell back at The Priory in Roehampton, west London, an experience he found quite comforting a year on from his time there.

Philip Scott, chief executive of The Priory, said: 'The transaction is expected to be completed within the next few weeks and will put the company on a stronger foothold for the flotation.'

In return for RBS wiping out almost half the company's debt, other shareholders - among them members of staff and former chief executive Chai Patel - will see their stakes in the business reduced.

But if the company is valued at £1.3 billion on flotation it will still mean spectacular gains for some. Ashcroft, for example, paid only £45.5 million for his shares in 2007.

The company, Britain's biggest independent care specialist with more than 18 therapy clinics plus hospitals and treatment centres, will name investment banks JP Morgan, Morgan Stanley and Hoare Govett to handle the listing likely to take place in the autumn.

The debt-for-equity swap mirrors a similar transaction at Four Seasons Healthcare, where RBS is also a major shareholder and which attempted to merge with The Priory last year. The bank would not comment.

There is a growing appetite for companies to be listed this year as banks and private equity groups try to realise profits from investments made before the credit crunch. Other likely floats include fashion chain New Look, frozen foods giant Birds Eye and retailer Pets at Home.

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