IK sells dental group Colosseum Smile to Jacobs Holding

The transaction also sees the exit of Swedish growth investor Scope Capital, which was the first institutional backer of what would eventually become Colosseum Smile.

Colosseum Smile's new owner is Zurich-based investor Jacobs Holding, the investment vehicle of Klaus J Jacobs, the now-deceased former owner of Toblerone-maker Jacobs Suchard.

Having invested in Colosseum with its €1.675bn Industri Kapital 2007 Fund in June 2010, IK claims to have tripled the company's size since, in part through the merger with Scope-owned Smile in 2014. IK took a majority stake in Colosseum through its initial investment and remained the majority owner of the company through its growth and eventual merger with Smile, with Scope becoming a minority shareholder.

IK partner Thomas Klitbo told unquote" the sale had come after an auction process run by Nordic bank ABG Sundal Collier, attracting significant interest from PE-backed and non-PE-backed trade buyers and financial investors. As a result, IK decided to run the process with access given to a handful of chosen prospective acquirers.

According to reports, EQT and Altor featured as second-round bidders in the process, though IK declined to comment on whether this was the case.

Klitbo said the timing of the exit was the natural progression of its investment, given the GP's initial backing of the company had happened in 2010. The initial deal for Colosseum was considered to be small for the IK fund and more of a growth investment than buyout, as the GP had invested in a less mature company with more high-growth potential than is typical for its buyout transactions, said Klitbo.

According to him, the GP typically does a limited number of more growth-type deals in its funds, in addition to more traditional buyouts.

IK's motivation for entering Colosseum's ownership structure early was mainly the sectoral growth trend of private dental care that was becoming apparent at the time, seen in the consolidation and growth of British companies in the industry – also largely backed by private equity.

Colosseum was the largest player in a highly fragmented Scandinavian private dental care market and IK saw a strong potential to drive consolidation in the sector, Klitbo said, which was achieved through standalone bolt-on acquisitions as well as the merger with Smile. During its ownership, IK focused on strengthening and developing the company, initially through smaller add-ons, greenfield expansion, growing the management team and improving organisational structures. Later, the focus shifted to growth through consolidation and saw the company acquire 10 clinics over the past 18 months. From an initial 18 clinics in Colosseum, the new group now counts 52 practices.

Since investing in Colosseum, the consolidation trend in the dental sector has only accelerated and is now happening across Europe, with large-cap players increasingly driving the space, according to Klitbo.

The transaction is expected to close in the beginning of 2017. IK declined to comment on the transaction's size or any return figures.

Previous funding
In July 2007, Swedish growth investor Scope acquired a 52% stake in Stockholm-based dental clinic operator Smile, tapping its Scope Growth II vehicle for the equity.

IK backed Oslo-headquartered dental business Colosseum in June 2010, investing through its €1.675bn Industri Kapital 2007 fund.

Smile and Colosseum merged to become Colosseum Smile in March 2014, with IK becoming the majority owner. The merged group operated 41 clinics across Sweden, Norway and Denmark, employing around 800 people and generating SEK 850m of revenue.

Company
Headquartered in Oslo, Colosseum Smile is a private dental care provider in Scandinavia.

The group employs a total of 1,200 people in its 52 clinics across Sweden, Norway and Denmark. According to a statement by IK, the company generated revenues of NOK 1.2bn in its most recent financial year.

People
IK Investment Partners – Thomas Klitbo (partner).
Colosseum Smile – David Halldén (CEO).
Jacobs Holding – Tomas Aubell (head of investments).

Advisers
Vendor – ABG Sundal Collier (corporate finance).

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• Topics
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• ABG Sundal Collier