Buyout group HgCapital is planning a potential 300 million euro ($342 million) sale of nursing home operator Casa Reha as the consolidation of Germany's fragmented healthcare services sector continues apace, sources familiar with the deal said.

The private equity group has asked investment bank Lazard (LAZ.N) to find a buyer for the business, which has annual earnings before interest, tax, depreciation, and amortization of about 30 million euros, the sources said.

HgCapital is hoping to attract offers of about 10 times Casa Reha's operating earnings in the auction which will officially begin in late spring, the sources added.

The industry is expected to experience strong growth in the coming years because of the aging population, though nursing home operators face the challenge of maintaining care quality while keeping costs under control.

Casa Reha will be marketed to peers such as French groups Korian (KORI.PA) and Orpea (ORP.PA), as well as to asset management group Carlyle (CG.O), the sources said.

Korian has bought German chains Phoenix and Curanum in recent years, while Orpea acquired peer Silver Care last year. Carlyle, meanwhile, owns rival care home business Alloheim.

Casa Reha operates 71 nursing homes with about 10,000 beds in Germany, making it one of the top five operators alongside market leader Pro Seniore, Korian, Kursana and Marseille Kliniken.

Germany's healthcare services sector has seen a wave of deals of late, with Dutch private equity group Waterland buying Median Kliniken, the country's largest private-sector chain of rehabilitation clinics and Fresenius (FREG.DE) buying hospitals from Rhoen-Klinikum (RHKG.DE).

HgCapital bought a majority stake in Casa Reha in 2007, while former owner Advent retains a minority holding.

Advent and Lazard declined to comment. An HgCapital spokesman was not immediately available for comment.