OMERS Private Equity is getting back into vet care through a deal to acquire Cortec Group’s Community Vet Partners, four sources told PE Hub.
A transaction has not been formally announced; however, the firm in October preempted a sales process for the Philadelphia-based veterinary hospital company, two of the people said.
Piper Jaffray offered sell-side financial advice on the transaction, the sources said.
The pending deal is valued at around 20x Ebitda, two of the people said. The company marketed fiscal year 2019 Ebitda of approximately $30 million, they said, which would imply a valuation around $600 million.
For OMERS Private Equity, of Canadian pension fund OMERS, the deal marks a re-entry into veterinary care.
ARES Management and OMERS in June announced an agreement to sell industry giant National Veterinary Associates to JAB Investors, which invests on behalf of Germany’s Reimann family.
Financial terms of the transaction weren’t disclosed, but the deal was said to command an enterprise value north of $5 billion, PE Hub reported.
Led by CEO Kevin Ruffe, Community Veterinary Partners manages more than 60 animal hospitals across 10 states, predominantly in the northeastern U.S. The company provides back-office support services to affiliated vet hospitals, including leadership development, HR support and finance.
Cortec, a New York middle-market private equity firm, invested in Community Veterinary Partners in November 2015 through Cortec Group Fund V. Piper Jaffray advised the company on the sale.
The pending transaction is emblematic of private equity’s continued appetite to put capital to work in veterinary care. Financial buyers have continued to flock to vet care, fueled by macro trends including white space for consolidation, pets’ longer life spans, cash-pay reimbursement dynamics and the industry’s perceived recession resistance.
In recent activity, San Francisco’s Gryphon Investors agreed to acquire Heartland Veterinary Partners, providing an exit for Chicago’s Tyree & D’Angelo, PE Hub reported earlier this month. The deal has not been publicly announced; however, sources suggested the Chicago veterinary support organization commanded an enterprise value in the $350 million to $400 million range.
The next asset of scale poised to trade hands is Morgan Stanley Capital’s Pathway Vet Alliance. The firm engaged Jefferies, Harris Williams and Morgan Stanley Investment Banking to advise a future dual-track sale and IPO process, PE Hub reported in September.
Based upon the high teens to 20x Ebitda multiples at which recent vet care assets have traded, MSCP in a potential sale would likely seek a valuation in the high $2 billion range to upward of $3 billion, sources said.
An OMERS spokesperson declined to comment. Cortec, Piper Jaffray and CVP did not return PE Hub‘s requests for comment.
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