MSD Capital acquires DentalCare Partners

The Michael Dell-backed investment vehicle has purchased a Cleveland, Ohio-based dental services firm with more than 70 affiliated practices.

DentalCare Partners has been purchased by investment firm MSD Capital, along with minority investor North Peak Capital. The two New York firms acquired the 26-year old dental services company for an undisclosed amount from Cleveland-headquartered Blue Point Capital and Chicago-based private equity management firm Beecken Petty O’Keefe & Company.

DentalCare Partners provides an array of management services to more than 70 Sears Dental and DentalWorks practices in the Midwest and Southeast regions of the US. In 2006, the company generated more than $100 million in annual revenue.

Investment in dental-related firms has proven lucrative for numerous private equity firms. In February, New York-based FdG Associates made an 8.1 times return on its $12 million DentaQuest investment. London-based Risk Capital Partners sold Integrated Dental Holdings in April 2006 for more than £100 million, representing a return of more than 10 times its original investment. Meanwhile, PPM Capital, the buyout arm of UK insurer Prudential, continues to snap up dental-related firms throughout Europe.

The DentalCare deal is North Peak’s first since its late 2005 founding by Michael Kahan, formerly a managing director at Canadian private equity firm Onex. North Peak aims to invest between $2 million and $10 million in small- to mid-sized companies, primarily in the healthcare services sector.

MSD was founded in 1998 to manage the assets of Michael Dell, the founder, chairman and chief executive of computer company Dell. It currently manages more than $12 billion in capital.

Since 2005, MSD’s private equity group has been led by Eric Rosen, a former managing director at Onex. Its private equity portfolio companies include ValleyCrest Companies, the largest integrated landscape services provider in the US, and wholesale electrical product distributor US Electrical Services.