BLACKSTONE, the American buyout firm, is drawing up plans for a flotation of Southern Cross, the £1.5 billion nursing-home group it has created through a string of acquisitions.

The firm, which built the business through the purchase of NHP and Ashbourne as well as Southern Cross, is working on ways to raise fresh capital to grow further. It is understood that a flotation is one option under consideration.

The group, built up during a buying spree over the past 16 months, is Britain’s market leader with 28,000 beds, having overtaken Bupa.

Blackstone has spent about £1.5 billion on building Southern Cross, although this figure includes a large amount of debt. Analysts estimate the equity value of the business at between £350m and £500m.

Blackstone, which declined to comment on its plans for Southern Cross, has successfully employed this “buy and build” technique in a number of other industries. It has formed one of Britain’s two biggest cinema businesses with the acquisition of Cineworld and UGC, the multiplex chains. And it is creating one of Europe’s largest visitor- attractions businesses after snapping up Legoland and Merlin Entertainments, owner of the London Dungeon, in quick succession last year.

The Sunday Times also revealed in November that Blackstone was planning to acquire three big frozen-food companies currently on the market and merge them into one £2 billion operation.

There is speculation that another large nursing-home group could look to float in the coming year.

Barchester, which is owned by the Irish racing tycoons John Magnier and JP McManus, is tipped as a possible candidate to go public but it is open to debate whether the market would happily take both companies.

Despite having the market leader, the fragmented nature of the care-home industry in Britain means Blackstone accounts for only 6% of the overall market. While that may indicate there is scope for future acquisitions, analysts warned that the Office of Fair Trading (OFT) was likely to look hard at future deals.

Paul Saper, an industry consultant, said: “The OFT has started to rattle cages in this sector . . . That might put a halt to some of the more aggressive thoughts on consolidation.”

Blackstone moved into the sector in 2004 when it acquired Southern Cross from West Private Equity for £162m. It then bought NHP for £1.1 billion, including debt. It completed its hat-trick of care-home deals with the purchase of Ashbourne from Electra Partners for an estimated £85m last November.

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