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We have recently been reporting on many hedge funds buying distressed debt in Europe. Among the funds we have discussed are Apollo, Paulson & Co, Seth Klarman’s Baupost Group, Apollo, David Tepper’s Appaloosa among the noteworthy.

Sources familiar with the matter told us that Baupost has not been as aggressive as others in this sector despite finding some value, because they see further downside in Europe.

Our sources have told us that United Kingdom care homes is a big emerging distressed sector, with many players getting involved. One example is GHG, which is owned by Apax Partners Holdings Ltd., a large private equity firm with operations in the US and Europe, and Netcare Limited, an investment holding compan, which also operates the largest private hospital network in South Africa and the United Kingdom.

General Healthcare Group (GHG) is the leading provider of independent health care services in the United Kindom. GHG has an operating company and a property company. KKR Financial Holdings LLC (NYSE:KFN) owns a lot of junior debt at the subsidiary company. We do not have exact numbers, but our sources tell us that KKR bought about 100 million pounds (approximately $160 million) of this debt, at around 60 cents on the dollar.

The tier of debt is current trading at around 40 cents on the dollar. Many analysts and even Netcare think is worth zero. We have not delved into the thesis, but it seems interesting based on the latest financial results. Profit after tax was 21 million pounds, but propco (the subsidiary), lost 13 million pounds for the year.

We cannot confirm which KKR fund owns the debt, and there is no guarantee its worth zero, but it is telling that even Netcare thinks the junior debt which KKR bought is worth nothing.

If KKR finds a willing buyer, which does seem a bit unlikely right now there likely will be more news on this.