Exclusive: Mubadala, CapVest ‘among second-round bidders for Dentex’

Zina Fragkiadaki
June 17, 2022
M&A

Abu Dhabi’s sovereign investment fund Mubadala Investment Company and private equity firm CapVest are rumoured to be among those in the run to acquire Dentex, the UK-based private dental partnership network, as the second-round bid kicks off, two sources have told this publication.

The process is attracting interest from the financial community but some interest from strategics is expected too, according to an advisory source. HealthInvestor understands that Colosseum Dental Group is a logical strategic investor.

Investment bank Jefferies was hired earlier this year to run the sale of the business as reported by HealthInvestor.

Filed accounts have the group’s revenue in the year to March 2021 at around £60 million and its gross profit at around £29 million.

Sources say Dentex is being marketed off an EBITDA of around £32-36 million. Dentex is pushing into a mid-teens EBITDA multiple, however, that’s questionable, according to one source. A second source adds that bids are below Jefferies’s pitch.

The first source says: “Dentex is clearly a strong business in a strong market. The challenge that people are having to work through is risk mitigation because of its ownership structure which presents a risk if key individuals in the organisation are going to be paid a large sum and lose their buying mechanism. Ultimately there is a need to structure a deal that keeps them locked in, which may not be palatable for them, or it goes to value.”

Founded in 2016, Dentex is a private dental consolidation platform.  Universal Partners, a Mauritius-based investor, is owning 34% of the asset, according to its website. Unlike other dental businesses, Dentex operates under a co-ownership business model, meaning that it offers partners equity in the group – up to 20% of the purchase consideration for a practice is settled in Dentex equity, creating alignment through co-ownership whilst retaining clinical freedom for the dentist.

Universal Partners first invested £32.3 million in Dentex in 2017 when the company had only three dental practices. To date, Dentex has grown to 125 practices across the UK, according to its website.

Private equity has recognised the dental market’s potential evidenced through recent activity including CapVest’s acquisition of Rodericks, which later acquired Dental Partners, as well MyDentist’s takeover by its minority shareholder Palamon. What’s more, Apposite-backed Riverdale is expected to hit the block late this year.

CapVest and Jefferies declined to comment. Universal Partners, Mubadala and Colosseum did not respond to requests for comment.

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