Bain Capital Private Equity, LP is understood to be selling its Western Australia-based age care business Craigcare Group Pty Ltd. and is set to walk away from its $775m takeover target Estia Health Limited. EY is working on the sale for the Boston-based private equity firm. Bain Capital purchased Craigcare through its credit arm in 2017.

Sources say that Bain was a lender to the business and the sale was part of a move to protect its investment. Yet sources say Craigcare is generating about $10m of annual earnings before interest, tax, depreciation and amortisation amid tough industry conditions. It is understood that Bain previously considered a sale, through Moelis, but the asking price was too high.

Some believe that if Bain was progressing on its deal to buy Estia, it would have retained Craigcare, as aged care requires scale. Speculation emerged last week that Bain was poised to walk away from Estia, a listed aged care provider, after it made an offer of $775m, or $3 per share, in March. The offer was rejected, but Bain was offered the opportunity to undertake due diligence.