Dentalcorp, PE-backed Canadian dental giant, nears sale to L Catterton

  • Imperial, OPTrust put C$121 mln in Dental Corp
  • Toronto dental company’s Ebitda ~C$115 mln
  • KKR in March bought U.S. dental major Heartland

Imperial Capital Group and OPTrust Private Markets Group are approaching the sale of Dental Corp of Canada after rapidly scaling the largest dental network north of the border, according to sources familiar with the matter.

The buyer is consumer-focused buyout firm, L Catterton, which two of the sources said preempted a Jefferies-run sales process. The transaction has not yet closed, one of the sources said.

Dentalcorp, Toronto, scored close to a 14x multiple of its roughly C$115 million (US$89.3 million) of Ebitda, implying a deal valued around C$1.6 billion (US$1.24 billion), sources said.

The anticipated transaction suggests a handsome return for the dental company’s existing backers, whose combined investment dates to July 2014.

Imperial and OPTrust jointly invested C$121 million in Dentalcorp, in a deal that one of the sources said valued the company in the ballpark of C$350 million.

Imperial assumed a controlling stake in Dentalcorp in connection with the 2014 deal, marking what then represented the Toronto firm’s largest investment in its history, Buyouts reported.

The investment, led by Imperial Partner Justin MacCormack and Principal Gene Chkolnik, was made through the sponsor’s fifth fund. Fund V raised $295 million in March 2014.

OPTrust, for its part, invests on behalf of OPSEU Pension Plan, the retirement system for about 92,000 Ontario public employees. Managing Director Sandra Bosela heads up the PE group.

Founded in 2011 by CEO Graham Rosenberg and a dentist, Andrew Meikle, Dentalcorp runs a network of more than 250 general and specialist dental clinics across Canada.

The company’s management services range from recruitment and training to compliance support and IT services, among other things.

It was only three weeks ago that prolific healthcare investor KKR announced a deal for the largest dental-services organization in the U.S., Heartland Dental.

The majority acquisition of Heartland, Effingham, Illinois, provides an exit for shareholders including Ontario Teachers’ Pension Plan. Jefferies also offered sell-side advice on the transaction.

The Canadian dental market, which remains less consolidated than the U.S. market, has seen other new PE investment this year. Sentinel Capital Partners in January invested in Toronto DSO Altima Dental following a Houlihan Lokey-run auction.

Imperial and OPTrust, for their part, have joined forces on more than one deal.

The pair of investors in April 2015 backed Ackerman Security Systems in a deal that valued the U.S. home-alarm-monitoring company at about US$150 million, a source told Buyouts at the time.

For L Catterton, Greenwich, Connecticut, the expected deal follows the sale of dental-implant provider ClearChoice to Sun Capital Partners in November. The sale followed a Goldman Sachs-run auction.

The sponsor formerly known as Catterton Partners Corp holds investments in other consumer-oriented healthcare companies including Pain Doctor, a Scottsdale, Arizona, provider of pain-management services; CareDent, a network of dental clinics in Italy, and PatientPoint, a patient-education company.

Representatives of Imperial Capital and Jefferies declined to comment, while those with OPTrust and Dental Corp didn’t immediately return requests for comment.

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