Private equity's '£1bn bid' for Priory Group

US private equity firm Bain Capital is the front-runner for the near £1bn deal for mental health specialist the Priory Group, people familiar with the matter said yesterday.

Bain has not yet entered exclusive talks with the owners of the Priory, Royal Bank of Scotland, the source said.

The Priory operates more than 50 hospitals, schools and care homes in Britain and is best known for treating celebrities. RBS, majority owned by the government, is seeking just over 1bn for the business, as part of its sale of non-core assets to slim its balance sheet.

RBS and Bain declined to comment.

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Bain will meet several banks this week to line up debt financing for the deal, potentially of up to 600m, and perhaps relying solely on sterling high-yield bonds, one source said. JPMorgan, RBS and other banks could be involved.

Other bidders for the Priory included Blackstone, Advent International and Cinven.