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Chicago Pacific Founders’ SAGE Veterinary goes to NVA for $1.25bn

NVA, backed by the Reimann family’s JAB Investors, makes a sizable bet to bolster its specialty vet care operations. 

Chicago Pacific Founders is selling SAGE Veterinary Centers at a valuation of at least $1.25 billion, according to sources familiar with the transaction.

The sources said the buyer of the specialty vet hospital network is National Veterinary Associates, which competed against other PE-backed strategics and pure-play sponsors in a Jefferies-run sale process.

According to an announcement on June 22, NVA, which is owned by JAB Investors, will combine SAGE with NVA Compassion-First, its specialty and emergency veterinary business. 

As part of the transaction, SAGE’s management, its founding veterinarians and Chicago Pacific Founders – which invested in 2018 – will roll over a portion of their investment proceeds into stock in NVA. 

Reflecting the continued strength and resilience of the veterinary care industry, the pending deal implies a value of at least $1.25 billion, or a 25x multiple of EBITDA based on today’s financials, sources said. PE Hub first wrote in May that participants in the process were looking to underwrite approximately $50 million in EBITDA.

Based in Concord, California, SAGE’s network comprises several specialty hospitals that offer oncology, cardiology, neurology, internal medicine and surgery. Each of its hospitals also provides 24/7 emergency care. The platform, which offers clinical support services to 16 locations across Alaska, California, Texas and Washington state, will join NVA Compassion-First’s existing network of 85 hospitals.

As the outcome suggests, specialty vet hospital platforms such as SAGE tend to command a premium when it comes to valuations, sources said.

Another similar, slightly bigger player in the late stages of its process is Ethos Veterinary Care, a portfolio company of BBH Capital Partners. Bank of America is conducting the Ethos sale process, PE Hub previously wrote. 

SAGE appears to be a winning investment for Chicago Pacific Founders, which typically invests up to $100 million of equity capital per opportunity in growth, minority recap and buyout transactions. 

The deal also reflects JAB Investors’ deep pockets and willingness to pay a premium in the veterinary sector. JAB, which invests on behalf of Germany’s billionaire Reimann family, bought industry giant NVA from Ares Management and OMERS Private Equity two years ago at a $5 billion valuation.

Four months earlier, JAB had unexpectedly outbid financial sponsors for Quad-C Management’s Compassion First. The deal was valued at $1.22 billion, topping sponsors’ bids by more than $100 million, PE Hub previously wrote. 

In more recent activity, Oak Hill Capital pre-empted a sale process this year for American Veterinary Group, valuing the company at $400 million-plus, PE Hub wrote in February.

Abandoning plans to list on the London stock market, IVC also scored an additional aggregate investment of €3.5 billion ($3.62 billion) that assigned the company an enterprise value of approximately €12.3 billion. The deal valued IVC at almost 30 times forward EBITDA, Reuters reported. 

With the IVC transaction, existing investor EQT made an additional investment through EQT IX. Silver Lake joined as a new substantial investor and minority investor Nestlé increased its stake.

Last summer, Berkshire Partners’ investment in Imperial Capital‘s VetStrategy valued the Canadian veterinary services network just north of C$1.4 billion ($1 billion), according to people familiar with the matter.

JAB, NVA and Chicago Pacific Founders declined to comment. Jefferies did not return a request for comment.