Advent to buy ATI Physical Therapy

Advent International is acquiring a majority ownership interest in ATI from KRG, which had purchased the company in 2012.

Advent International is acquiring a majority ownership stake in ATI Physical Therapy from KRG Capital Partners for an undisclosed amount, the firm said.

Through this transaction, ATI’s current management team led by chief executive Dylan Bates will retain its significant minority interest and continue leading the company. Advent operating partner Chris Krubert will also join ATI board of directors, the firm said. Advent’s operating partners are independent advisors to the firm and its portfolio companies.

“The outpatient therapy market in the US is large, growing and highly fragmented, and we believe that Advent’s resources and experts with healthcare services companies will help us to continue to successfully execute and accelerate our expansion strategy,” Bates said in a statement.

The outpatient physical therapy market in the US is valued at $15 billion, according to Advent, with more than 18,000 freestanding clinics in the country. Advent expects this market will keep growing due to the aging population and an increased usage of physical therapy by different age groups, it said.

So far this year, KRG made four add-on acquisitions via ATI. ATI purchased Charleston Physical Therapy, Orthopedic Institute of Wisconsin, Ideal Physical Therapy and Charleston Physical Therapy On-Site Partners, according to ATI’s website.

ATI is a rehabilitation provider that operates more than 500 locations in 19 US states, having served almost 300,000 patients last year. It was acquired in 2005 by Fund III of KRG Capital Partners, which sold it in an all-cash transaction to GTCR Golder Rauner five years later. Then, two years later, in 2012, GTCR sold its interest in ATI back to KRG, which used capital from its Fund IV.

This transaction with Advent is expected to close in the second quarter.

Advent declined to comment.

Jefferies and UBS are providing financial advice to ATI, while Hogan Lovells is legal advisor. Advent is receiving financial advice from Barclays and legal advice from Weil, Gotshal & Manges and McDermott Will & Emery.

Advent has been investing in healthcare for 25 years, it said, and has completed more than 35 transactions in 14 countries in the sector. Its recent sector investments include US specialty pharmacy operator Genoa: a QoL Healthcare Company, Dutch pharmaceuticals and medical and care services distributor Mediq, and US payment accuracy provider Cotiviti.

The firm managed $29 billion in assets as of 31 December. The amount excludes the $13 billion raised for its Advent International Global Private Equity VIII, which closed earlier this month in excess of the $12 billion target in six months, as reported by Private Equity International.

KRG is over one-fifth of its way toward the $500 million target for its KRG Capital Fund V, having raised $148.4 million, as reported by PEI.