Priory Group - the chain of clinics famous for helping celebrities overcome their addictions - was snapped up by Dutch bank ABN Amro yesterday in a deal valuing the business at £875 million.

The group, which has more than 1,800 beds in 42 locations - including the Woodbourne Priory Hospital in Edgbaston, Birmingham - was sold by private equity firm Doughty Hanson just three years after it acquired the company.

Doughty is said to have made a return of at least four times its original equity stake. However, the size of Doughty's holding - and that of chief executive Chai Patel and other management - was not disclosed.

Since the takeover in 2002, the Priory Group has added 11 sites and now includes 15 psychiatric hospitals, seven schools, two therapeutic community assessment services and five brain injury and rehabilitation units.

The portfolio includes two of the UK's oldest private mental health hospitals - at Roehampton and Ticehurst House near Wadhurst, East Sussex.

The group was founded in 1980 with the acquisition of the Roehampton site by Community Psychiatric Centres, an American company based in California.

Growth and further expansion of acute psychiatric hospitals in the 1980s and 1990s started with the acquisition of a site in Bromley, south east London, in 1983.

The current Priory group is the result of Dr Patel acquiring Priory Healthcare and merging it with the specialist healthcare services division of Westminster Health Care in 2000.

The purchase price will be covered by a mix of debt and equity, with 80 per cent of the equity portion held by ABN Amro. The rest is in the hands of the management team, which increased its holding from 14 per cent through yesterday's deal.

Dr Patel said: "We are delighted to have gained the support of one of Europe's leading banks.

"Priory Group has the potential to act as a consolidator within its sector and this deal brings us a partner who not only shares our vision, but is able to back it with significant financing and advisory expertise over the long term."

So far this year, ABN Amro has arranged the debt and equity financing for a new oncology and haematology hospital in Hull, a new NHS hospital in Peterborough and four new school campuses in Rochdale.

The Priory is best known for its celebrity guest list, which has included singer Pete Doherty and ex-England footballer Paul Gascoigne.

Last month Aston Villa chairman Doug Ellis underwent a successful heart bypass operation at the Woodbourne Priory, which first opened its doors in 1985.

ABN Amro is thought to have beaten off strong competition to win the auction, with venture capital groups Apax Partners, Cinven and Charterhouse among the other parties thought to be interested in the company.

"The acquisition highlights our interest to invest in well positioned, high-growth companies with multiple investment banking needs," Piero Overmars, head of ABN's wholesale clients business said in a statement.

Equity analyst Sigrid Baas at ING said the principal finance deal builds on ABN's skills in investment banking and could provide the Dutchbased lender with additional revenues.

"This is one of the transactions that was in the pipeline that has made them quite confident about their investment banking earnings outlook for the remainder of 2005," she said.