At the recent Health Investor Healthcare Summit in London, we explored the realities of raising finance in today’s unpredictable economic climate. After a tumultuous 2024, uncertainty has continued into this year, marked by global instability, higher interest rates compared to the past 15 years, and persistent inflationary pressure. Added to this is ongoing uncertainty about tax and government spending in the UK, with the likely impact of any changes in the upcoming budget still unclear.
As part of a panel with leading sector experts Derek Breingan – head of health and social care at Virgin Money, and Jawad Khan – chief financial officer at Circle Health Group, we looked at how health and social care businesses can continue to raise finance against that backdrop. Here are my key takeaways from the session:
Demand remains high across the health and social care sector, providing a solid foundation for continued growth. In the UK, there are clear market opportunities, particularly as private providers play an increasing role in helping to reduce waiting lists for elective care and as there continues to be a need for good quality care homes.
This positive outlook is further supported by increasing interest from international investors, which is complementing the activity of traditional UK lenders and bringing new capital into the sector.
There is no one-size-fits-all approach to funding in the health and social care sector; the right solution depends on your organisation’s goals, sector niche, and time horizon.
Healthcare continues to attract both lenders and investors, thanks to its reputation for long-term stability. However, lenders differ in their risk appetite and approach, with new entrants and international capital increasingly active in the market.
For those seeking finance, it is essential to remain flexible and have contingency plans in place, ready to adapt if a lender’s stance or the broader funding landscape shifts.
Deals are still progressing in the sector, but the process has become slower, with extended timelines and more rigorous due diligence—particularly around CQC ratings and financials.
For new build assets, planning delays and rising development costs are increasingly common, and in some cases, construction costs may even exceed the end-value of projects, which can complicate refinancing.
To navigate these challenges, it’s important to start early, factor in the likelihood of longer timelines and higher costs, and continually reassess project viability and exit strategies from the outset and throughout the process.
If you have available debt capacity, consider deploying it strategically—for example, to support supply chain funding rather than relying solely on traditional borrowing. Blended finance remains an effective approach, particularly for deals under £50 million. Above all, treat debt capacity as a valuable strategic asset, using it to unlock greater operational flexibility and strengthen your organisation’s financial position.
Environmental, Social, and Governance – ESG, criteria are playing an increasingly important role in lending decisions across the sector. Both government focus on energy performance certificates and lenders’ efforts to grade portfolios on ESG compliance are some of the drivers.
While discounted loan structures are available for ESG compliant assets, financial incentives remain limited for now and perhaps aren’t significant enough to cover the costs associated with compliance. Nevertheless, it is wise to begin ESG improvements now, as these considerations are likely to start impacting asset values by 2027.
Despite economic volatility, health and social care remains a robust sector for investment. We continue to see new funders enter the sector, more appetite from some of the larger banks and an increasing amount of overseas investment. From a financing perspective, health and social care operators looking for finance should focus on strategic planning, flexible financing, and early action on ESG.
For more information, please contact Deborah Rowntree.
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