Deal in Focus: Ardian buys Dedalus for market consolidation

In early July, international private equity players acquired two of Italy's main competitors in the healthcare technology market: Ardian acquired Florence-based Dedalus while NB and Apax delisted Engineering Ingegneria Informatica from the Milan stock exchange, showcasing increasing interest for the fragmented sector. The GPs were attracted by the several opportunities offered by the Italian market and these two deals should usher in increased competition as the businesses vie to consolidate the sector.

"The European technology healthcare sector will inexorably face an important consolidation process in the coming years," says Yann Chareton, managing director at Ardian's mid-cap buyout team. Dedalus seems to be well positioned following its expansion strategy across the market; Ardian's buyout shortly followed the company's bolt-on of one of its largest competitors, NoemaLife, which allowed the group to double its headcount and to achieve global reach across 25 countries, according to a company statement.

Looking for a majority investor
To face the increasing competition, Dedalus started looking for an investor able to take a controlling stake in the business and expand the business both locally and internationally. The company has always had minority investors among its shareholder base, which made the transaction look like "an unusual secondary buyout", Chareton says.

As part of the deal, Ardian acquired its stake from Sino-Italian private equity house Mandarin Capital Partners, which owned a 35.59% stake, as well as alternative lender Hutton Collins Partners, which had invested in the business via an equity-debt package including a mezzanine tranche and a 14% equity stake. Furthermore, the GP acquired the remaining 10.41% stake from Health Holding Company, owned by Dedalus's founder, chair and CEO, Giorgio Moretti, who subsequently reinvested in the business to retain the remaining 40% of outstanding shares.

Nonetheless, the opportunity to retain a majority stake is a good starting position for Ardian, according to Chareton, but it is not the only factor that attracted the GP to the company. "Dedalus has a large visibility on the domestic market and builds long-term relationships with its clients," he says. "The highly fragmented market at a European level, with high entry barriers and an expansion strategy under way, are the other important factors that captured our attention."

Dedalus has notably completed 40 acquisition across the sector since its foundation in 2005 and nowadays employs a staff of 1,700, expecting to generate a turnover of €170m for the current fiscal year. Ardian stated it would keep the management team at the helm of the business and continue to focus on acquisitions.

According to Chareton, the business needs to focus on the overlap among its sizable products portfolio. The managing director adds that the recent acquisition of NoemaLife would allow the business to expand its service offering and boost sales among the merged client base.

Furthermore, following its recent expansion across Egypt and Saudi Arabia, Dedalus is now eyeing the Mexican and Chilean markets, with a specific focus on the public sector. Chareton justifies this strategic goal by the fact that emerging markets need to digitalise their national healthcare system, which represents an opportunity for Dedalus.

People
Ardian – Yann Chareton (managing director).
Dedalus – Giorgio Moretti (chair, CEO).

Advisers
Equity – Deloitte (corporate finance); Giovannelli e Associati (legal); KPMG (financial due diligence); CBA Studio Tributario (tax).
Company – DVR Capital (financial due diligence); BNP Paribas (corporate finance); Eversheds (legal); Gianni Origoni Grippo Cappelli & Partners (legal).

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• Topics
• Southern Europe
• Buyouts
• Healthcare
• Deal in focus
• Ardian (formerly Axa PE)
• Italy