HgCapital Trust

Pulse is a market leader in the placement of doctors, allied health professionals and nurses into flexible and permanent roles in the UK and abroad.

The company also provides flexible staffing solutions to the scientific and social care markets, and has a growing presence in the provision of complex healthcare packages in the community for severely disabled individuals.

For several decades the ever-increasing demands on the NHS have led to a consistent and significant shortage of qualified medical personnel. Sinclair Montrose Healthcare - as it was then called - was an established publicly-traded company in a fragmented but growing market. HgCapital and private equity group Bridgepoint put together a joint bid to acquire Sinclair Montrose in a leveraged public-to-private deal.

The bidding consortium acquired just less than a 90% shareholding in the company. Fidelity Investment Managers shared our perspective on the opportunity for value creation and maintained their 10% holding throughout the life of our investment.

Initially, HgCapital’s strategy was to support a leading consolidator in a growing industry, through the twin routes of debt pay-down and M&A opportunities. An early example of this was the acquisition of Quality Locums in 2000.

Our support came primarily through the backing of new management at key moments in the investment’s life cycle as well as our long-term faith in the business. Working closely with the company’s management meant that, when market conditions were at their most hostile and our partner, Bridgepoint, wanted to sell their investment, we decided to buy their stake and continued to work on new strategies for growth.

After the initial bedding in period, Pulse’s first challenge was the introduction of NHS Professionals in 2001. This was the result of the government’s response to the ever-growing spend on third-party agency staffing. It had the effect of introducing a heavily-subsidised competitor into the market and forced private firms to conform to a range of new regulations. Revenues fell as both volumes and margins came under pressure.

The business was clearly too dependent on the impact of Government policy changes on the NHS and needed to diversify. A new CEO, Richard Macmillan, was hired from Adecco in 2005. Under his direction, Pulse moved into social and community care in response to the shift of frontline healthcare delivery to the local community both in the UK and abroad.

2007 then saw a reduction in competition from NHS Professionals as pressure was brought to bear to force it to achieve commercial viability. Further, the introduction of the 18 week waiting list target led to a dramatic increase in demand for both temporary and permanent staff, and supported a strong recovery in Pulse’s core business.

Since the 2008/9 recession began the imperative on NHS hospitals has switched to saving costs and Pulse once again faces pressure on demand but, with the additional community healthcare business stream growing strongly, and the business being more focussed on the social care market than ever before, Pulse is far better prepared to weather the storm.

In the Spring of 2010, the US buyout group, Blackstone, acquired ICS, a rival healthcare recruitment agency which specialises in last minute, high margin staff provision, as part of a buy and build strategy in the sector. Being aware as we were of Blackstone’s strategy for their investment, we approached Blackstone with the suggestion of them acquiring the more diversified and broader-based Pulse and merging it with ICS.

In November, the deal was struck and Blackstone acquired Pulse. Blackstone merged the companies, retaining Richard Macmillan at its head.