Update: PE-backed vet-hospital-chain VetCor nears sale

  • Harvest, Cressey led recap of VetCor in April 2015; Cressey investment dates to 2010
  • Sell-side adviser: Jefferies
  • Hingham, Mass, company operates ~270 vet hospitals in U.S.

Harvest Partners and Cressey & Co– backed VetCor is approaching a sale to one of a number of bidders, including Swedish PE shop Nordic Capital, according to people with knowledge of the situation.

The network of veterinary hospitals is expected to command a valuation north of $1.5 billion, equating to a high teens multiple of Ebitda, the people said.

The anticipated transaction follows a Jefferies-run sales process, they said.

Based upon valuation expectations, VetCor appears poised to produce a handsome return for its current backers.

Harvest joined Cressey as an investor in the vet care company in April 2015 through a recapitalization of VetCor alongside management. While financial terms of the transaction weren’t disclosed, the Wall Street Journal reported that the deal was valued north of $350 million.

Cressey’s initial investment in VetCor dates to February 2010.

Jay Wilkins, Stephen Carlson and Ira Kleinman, partners at New York’s Harvest, serve on VetCor’s board of directors.

Founded in 1997, VetCor owns and operates 271 veterinary clinics across 28 states, its website states. The company’s services include general medical and services for pets, as well as pharmacy and other services such as boarding and grooming.

The Hingham, Massachusetts, animal health company is led by co-founder and CEO Dan Adams.

The anticipated deal comes on the heels of KKR’s December acquisition of the even larger PetVet, which marked an exit for Ontario Teachers’ Pension Plan and minority investors including L Catterton.

Vet care has received significant interest from the private equity community, fueled by the sector’s long runway for growth both organically and through consolidation. Consumers’ humanization of pets continues to drive demand for the services of these companies, while a lack of regulatory risk and litigation also makes for a nice PE investment.

Kicking off a slew of high-profile activity in the sector, Ares Management in 2014 scooped up the largest private operator of vet chains, National Veterinary Associates, or NVA. OMERS Private Equity injected a minority investment in NVA in June 2017.

More activity followed. The parent of Snickers candy bars, Mars, diversified further into the segment in January 2017 when it agreed to fork out $7.7 billion for VCA Inc.

Other PE-backed assets in the segment include Morgan Stanley Global Private Equity’s Pathway, Shore Capital investments Southern Veterinary Partners and Midwest Veterinary Partners, Cortec Group’s Community Veterinary Partners and Pamlico Capital’s Veterinary Practice Partners.

Representatives of Harvest and Cressey declined to comment, while those with Nordic and Jefferies didn’t immediately return requests for comment on Friday.

Update: A previous version of this report implied that VetCor was nearing a sale to Nordic. Based upon new information, the story has been updated to reflect that Nordic was among finalists in the process. 

Action Item: Take a look at the rest of Harvest’s current portfolio

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