The care home industry is facing a financial squeeze. Residential and nursing homes that care for the elderly, disabled and the terminally ill are stuck between falling income from cash-strapped local authorities and rising costs for rent and staff.

Yet private equity groups are circling some of the UK’s biggest care home operators, such as Southern Cross, Four Seasons, The Priory and Barchester, looking for an opportunity to take control in return for injecting fresh funding. In spite of the problems faced by the sector, the private equity houses believe there are still profits to be made.