Altas Partners, a pioneer of long-life private equity investing, agreed to buy the largest educator of physical-therapy professionals in the United States.
The Toronto investor on Wednesday announced it will pay US$400 million to acquire the University of St. Augustine for Health Sciences, an academic institution that provides graduate health-science degree programs, primarily in the field of physical and occupational therapy.
The 39-year-old school, which offers classroom and distance training opportunities, has campuses in San Marcos, California, St. Augustine and Miami, Florida, and Austin, Texas.
The deal, expected to close in the fourth quarter, will transfer ownership of USAHS to Altas from Laureate Education, a global network of post-secondary institutions. Laureate acquired a majority interest in 2013.
USAHS appears to be right in the wheelhouse of Altas, which was founded in 2012 by Managing Partner Andrew Sheiner, formerly a senior Onex Corp executive, to make control-stake investments in hard-to-replicate businesses and hold them indefinitely.
Sheiner and Principal Damon Conway told PE Hub Canada Altas has long coveted the “high quality, highly regarded” USAHS, which is expected to benefit from long-term demand for physical-therapy services in a growing population of aging baby boomers.
The institution’s reputation is partly based on student outcomes. Students attending USAHS had a three-year average graduation rate of 92 percent over 2015-2017, while available data point to recent post-graduation employment rates approaching 100 percent.
Conway, Altas’ point man on the USAHS deal, said the plan is to support the school’s management team, led by CEO Vivian Sanchez, and its strategy. He declined to share additional details.
Altas was created by Sheiner to invest up to $600 million in one to two deals per year. It invests selectively, with a horizon that goes well beyond the PE industry average of three to seven years. The goal is to own assets flexibly and long enough to generate maximum value.
A source with knowledge of the matter told PE Hub Canada Altas invested roughly US$1.3 billion in equity in the four deals done prior to USAHS. At the end of last year, the value of that equity stood at about US$3.2 billion, the source said.
Altas declined comment.
Sheiner expects USAHS to perform just as strongly with the investor’s help. “When you have the good fortune to own an institution like this, the largest physical therapy school in the United States, our orientation is to build it slowly and thoughtfully over a long period of time,” he said.
Macquarie Capital provided financial advice to Laureate in the USAHS deal, while Drinker Biddle & Reath was the legal adviser. Kirkland & Ellis advised Altas on legal matters.
USAHS is the third investment of Altas Partners Holdings LP, which raised US$1 billion in 2016. It was preceded by Capital Vision Services, a manager of optometry practices bought in 2015 by a group led by Altas and Caisse de dépôt et placement du Québec, and PADI, a scuba diving trainer backed last year.
The firm’s other investments are medical school St. Georges University and salt provider NSC Minerals. Altas capitalized those deals with institutional partners.
Sheiner today leads a team of a dozen investment professionals, including Partners Christopher McElhone, Paul Nicoletti and Scott Werry. Conway joined Altas two years ago from Mill Road Capital.
Photo of university graduates courtesy of Ancika/iStock/Getty Images
Photos of Andrew Sheiner and Damon Conway courtesy of Altas Partners