In July 2016, STAR completed the acquisition of Synergy Health Managed Services Limited (“Synergy LMS”) from Steris Plc for circa. €61 million. This was the first acquisition made by STAR’s third fund.
Synergy LMS was created in 1996 and provides a range of sterile linen and laundry management services to hospitals and other healthcare providers throughout the UK including NHS Acute Trusts, private hospitals, ambulance Trusts and healthcare and community Trusts. Synergy LMS owns three specialised facilities in Derby, Sheffield and Dunstable.
Why does the Synergy LMS business fit STAR's investment strategy?
- The business provides a critical and non-cyclical service to its customers, with high barriers to entry given its purpose built laundry facilities
- Good visibility of cash flow and robust down-side protection, driven by:
- Medium-term contracts linked to inflation; and
- Very high rates of customer retention
- Strong market position (c.23% market share) in an attractive sector, with national coverage
- Potential upside through further outsourcing as NHS focuses on savings, and entry of adjacent markets