Sam Macalister-Smith on investing in adult care home providers
In an earlier investment snapshot,
James Henderson commented on how the Wales SME Investment Fund has
enabled Finance Wales to invest in more businesses in the growing
professional services sector in Wales.
We’ve continued to see interest from the
sector and particularly from adult care home providers with Finance
Wales expecting to announce its first care home investment
Care home providers currently face significant
challenges in a highly regulated sector with an increasing focus on
care excellence. For many, getting their business model right faced
with such complexities will be the key to long-term success.
Investing in care excellence
A Department for Business Innovation &
Skills review into the adult care homes sector in October 2013
called for ‘better benchmarking’ and ‘additional regulatory
measures’. Providers are increasingly being expected to
demonstrate greater financial stability, as well as their long-term
Despite facing gearing levels higher than in
many other types of business, increasingly care home providers are
being expected to demonstrate their long-term financial
A strong mix of private and publicly funded
clients can underpin revenues and serviceability levels.
Added to this many have benefitted from historically low interest
rates in the last 5 years and will need to demonstrate their
resilience to rate rises.
Gearing up for long-term growth
Caring for the elderly in the UK currently
costs over £14 billion annually and this figure is rising.
The adult care sector is set for significant long-term growth, with
the need for high-quality, purpose-built accommodation
increasing. Quality improvements are also having to be
For many providers, the development phase of a
new extension or facility can stretch traditional lenders’ gearing
covenants, even if they can demonstrate strong cash-flows.
Backing sustainable long-term growth
Finance Wales is backing more Welsh SMEs in
the professional services sector than ever. If your client is a
care home provider with a first-class track record and a commitment
to excellence, we can use our local knowledge and expertise to see
beyond factors such as gearing levels and consider a range of
factors such as a provider’s ability to repay debt and historic
occupancy rates, for instance.
Finance Wales has a growing track record in
this sector and is keen to work with many of the local
intermediaries to develop further opportunities.
To speak to one of our locally based
investment executives, please contact firstname.lastname@example.org