EQT Partners chases $500m debt to bankroll VetPartners acquisition
Swedish private equity firm EQT Partners’ dealmakers are redirecting their energies to the debt financing for VetPartners, now that they’ve fended off rival bidders with their winning $1.4 billion bid.
The sell-side pitch highlighted VetPartners “successful M&A track record” resulting in 228 clinics acquired since 2016. Michelle Smith
Street Talk understands EQT is chasing more than $500 million in debt at about 400bps over swap rate. Talks with lenders are at about five times leverage.
It’s a pretty conservative level of leverage for a buyout, and would leave EQT with a significant equity cushion. It should give the business enough liquidity to fuel organic and inorganic growth. The debt is expected to be denominated in Australian dollars, and is fielding interest from global players.
Of note, EQT was leading the talks itself, with no advisers on the scene. It’s unclear whether the PE firm plans to appoint banks to arrange the debt.
VetPartners has 267 clinics in Australia, New Zealand and Singapore, which helped it make $661 million in revenue in the year to June 30. It posted $104 million in pro-forma adjusted EBITDA.
As revealed by Street Talk, its parent, California-headquartered National Veterinary Associates, hired investment bank Jefferies to run an auction which kicked off in August. Bidders were given only a few weeks to weigh their bids. EQT was an early arrival in the auction but faced competition from Pan-Asian private equity investor Affinity Equity Partners.
EQT will add VetPartners to its global portfolio of pet-related businesses. It has owned European and North American vet roll-up IVC Evidensia and its 2500 clinics since 2014. It also invested in British insurer ManyPets, and tag-teamed with the Abu Dhabi Investment Authority to take London-listed veterinary drugmaker Dechra private for £4.46 billion ($8.9 billion).
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