Dec 13, 2021 - Economy

Scoop: L Catterton invests in pet hospital chain Alliance Animal Health

Illustration of dog treats in the shape of a dollar sign.

Illustration: Aïda Amer/Axios

Veterinary hospital operator Alliance Animal Health has secured an investment from private equity firm L Catterton at a valuation of between $750 million and $800 million, Axios has learned from four sources.

Why it matters: Private equity in 2021 has shown an insatiable appetite for veterinary care.

Details: Existing shareholder LightBay Capital will remain an investor in Alliance.

  • The Stamford, Conn.-based company marketed $39 million of pro forma adjusted EBITDA in its sale process, sources said. That implies Alliance has grown EBITDA about fivefold since LightBay backed the business in June 2019, one person added.
  • Alliance is an owner and partner to veterinarians at animal hospitals in 15 states and growing, emphasizing medical independence and the benefit of shared resources (e.g., purchasing power).
  • L Catterton has a long history of investing in both pet and consumer health companies.

The big picture: Pet ownership is increasing, and investors view the vet care sector as recession resistant.

  • The U.S. government substantiated this notion when it declared vet practices essential businesses during the pandemic, and the industry proved adept at converting to a drop-off and pick-up model.
  • EBITDA multiples in the high teens into the mid-20x range are the new normal, although it's complicated a bit by a raft of bolt-on acquisitions.

What we’re watching: The possibility of 2022 IPOs from industry giants.

  • National Veterinary Associates, backed by JAB Investors, was said to be mulling a public offering earlier this year. More recently, it plunged deeper into specialty vet care with two $1 billion-plus deals, buying Ethos Veterinary Health and SAGE Veterinary Centers.
  • Europe's IVC Evidencia was expected to seek a public listing before Silver Lake invested earlier this year, valuing it at approximately €12.3 billion (over $13.8 billion).
  • Also on the IPO waiting list is Pathway Vet Alliance, owned by TSG Consumer Partners.
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