BC's VetPartners sees Blackstone, KKR, Partners Group among parties preparing bids

Christel Thunell , Min Ho , Rachel Lewis , Claude Risner , Maryna Irkliyenko and Josh O'Neill
15 February 2023

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Blackstone, KKR and Partners Group are among private equity firms preparing bids for BC Partners-backed VetPartners ahead of the sale launch, six sources familiar with the situation said.

TPG, Cinven and PAI Partners have also shown interest in the UK-based veterinary group, according to one of the sources.

Blackstone has already hired advisors for the process, one of the sources said.

Antin was also previously touted as a potential buyer, but is no longer in the starting lineup, according to two of the sources.

NDAs in connection with the sale have been sent to interested parties and marketing materials are expected in the next few weeks, according to one of the sources.

VetPartners will be marketed off EBITDA of GBP 150m-GBP 200m, two of the sources said. GBP 200m is an "aspirational" number, including future M&A, one of them said. EBITDA that the deal is structured off is likely to land somewhere in the middle of GBP 150m-GBP 200m, a seventh source added.

The company reported adjusted EBITDA of GBP 120m on GBP 574m revenue for the year ended 30 June 2022, up from EBITDA of GBP 89m on GBP 431m revenue for the year prior, according to its latest financial statement.

Valuation expectations are 15x-20x EBITDA, where 20x is "crazy", according to two of the sources. While 15x is more realistic, considering the general macro headwinds and slowing post-Covid-19 growth in the sector, this might still be ambitious, one of these sources cautioned.

With an expected price tag in the GBP 2.5bn-GBP 3bn region, financing could be a challenge in the current leveraged finance markets, an eighth source and two sector advisors noted. The asset could go either down the syndicated or direct lender route, the source said.

VetPartners ranks as the 13th most likely healthcare exit in Europe with a likely-to-issue (LTI) score of 69.30/100, according to the predictive algorithm by Dealogic.

As previously reported by Mergermarket, VetPartners' sponsor BC Partners is working with JP Morgan and Jefferies on the potential exit.

BC Partners, Blackstone, KKR, Partners Group, TPG, Cinven, PAI Partners, Antin, and JP Morgan declined to comment. Jefferies did not respond to a request for comment.