CapMan Russia, a fund managed by CapMan, has acquired a 24 percent stake in KDL Test, a chain of private diagnostic laboratories in Russia. The investment has been made jointly with the European Bank for Reconstruction and Development and UFG Private Equity.
CapMan Russia, a fund managed by CapMan, has acquired a 24 percent stake in KDL Test (KDL), a leading chain of private diagnostic laboratories in Russia. The investment is made jointly with the European Bank for Reconstruction and Development (EBRD) and UFG Private Equity. The objective of the transaction, which is CapMan’s first in the Russian healthcare space, is to further strengthen the target company’s market position in Russia’s fast-growing private laboratory market.
Founded in 2003, KDL is the third largest private laboratory diagnostic services provider in Russia. As of July 2011, KDL operated six laboratories and several points of sale in Moscow, Perm, Omsk, Krasnodar, Kazan and Astrakhan. Private medical clinics and state-owned clinics account for the majority of the company’s customers. KDL employs approximately 450 people.
The Russian laboratory market is dominated by state-owned players, which employ dated technology and practices. The private market has grown by 20-30 percent annually between 2006 and 2010 following increased penetration of private healthcare services and growth in demand for diagnostic testing, as well as increased complexity of tests performed. The need for modernization of the sector and the lack of international competition provide opportunities for established national laboratory service providers.
“Our ownership in KDL represents our first transaction in the healthcare space in Russia. We have identified private laboratory diagnostic services, a sub-sector of the private healthcare market, as one of the most attractive markets in Russia at the moment. The sector’s growth potential will remain in the double digits over the next four to five years as per capita laboratory expenditure in Russia is trailing far behind most developed and developing countries. As one of the leading independent laboratory diagnostic services providers in Russia, KDL is well-positioned to respond to the growing demand and strengthen its position in the market,” says Maxim Popov, Investment Director at CapMan Russia.
CapMan Russia invests jointly with EBRD and UFG Private Equity. The investment will advance in several stages. Following the initial investment, CapMan Russia Fund will own 24 percent of the company’s equity, while the remaining shares are held by the founders, UFG Private Equity and EBRD. CapMan Group and EBRD are investors in the CapMan Russia Fund. Further financial details of the transaction are not disclosed.
Alexander Devyatkov, founder of KDL says: “It is our pleasure to welcome new partners into our business, and with them we will work to continue the development of our company. In Russia, demand for private lab services is expected to growth 15 – 20 percent per year driven by the penetration of laboratories, the growth of the private health care industry and increased outsourcing by the public sector. Thanks to our new investors, we plan to substantially increase our market share and develop a federal laboratory network with presence in all the major regions.”
Robert Sasson, Senior Managing Partner, UFG Private Equity comments: “Healthcare services are what people will always need and we see a growing trend of healthcare expenditure in Russia. We believe that the new investors group will add value to KDL and will help it to continue to develop at a fast pace, doubling the number of laboratories by 2014. We strongly believe in healthcare sector growth, and will continue looking at other investment opportunities in this sector”
“The project gives the EBRD an opportunity to support a Russian company which is dynamic, home-grown and professionally managed in its drive to bring modern medical testing services within reach of large swathes of the population,” says Alain Pilloux, EBRD Managing Director for Industry, Commerce and Agriculture.
Maxim Popov, Investment Director, CapMan Russia, tel. +7 (495) 620 48 85
Alexander Devyatkov, KDL Test, tel. +7 (495) 640 05 33
CapMan Group is one of the leading private equity firms in the Nordic countries and Russia, with assets under management of €3.0 billion. CapMan has four key investment partnerships – CapMan Buyout, CapMan Russia, CapMan Public Market, and CapMan Real Estate – each of which has its own dedicated investment team and funds. Altogether, CapMan employs 120 people in Helsinki, Stockholm, Oslo, Moscow and Luxembourg. CapMan was established in 1989 and has been listed on the Helsinki Stock Exchange since 2001.
KDL Group was established in 2003 and now is the #3 participant in the Russian laboratory market. In addition to its central laboratory in Moscow, KDL operates five regional labs in Perm, Omsk, Kazan, Krasnodar, Astrakhan, and several blood collection points. KDL Group was certified to GOST R ISO 9001-2008 and 15189-2009 standards in October, 2011.
The EBRD, owned by 63 countries and two intergovernmental institutions, supports the development of market economies and democracies.
UFG Private Equity www.ufgam.com
UFG Private Equity is part of UFG Asset Management group, a leading Russian-region focused alternative asset manager with over $1.25 billion of assets under management across debt and equity hedge funds, managed accounts, real estate/agriculture funds as well as tradition private equity funds. UFG Private Equity funds invest in companies primarily in Russia as well as the neighbouring CIS countries. UFG backs exceptional management teams in businesses with clear growth opportunities and where there is an opportunity to significantly increase equity value for shareholders. Since its inception in 2005, UFG Private Equity has participated in 18 investments with an aggregate transaction value of over $1 billion.