OMERS bets on US dental services

OMERS Private Equity has purchased Michigan-based Great Expressions Dental Centers, a ‘recession resistant’ business, according to the Toronto-based pension.

OMERS Private Equity has purchased Michigan-based Great Expressions Dental Centers from mid-market private equity firm Audax Group. Financial terms of the transaction were not disclosed.

Great Expressions is a dental practice management company providing “all facets of dental services”, according to a statement. Audax Group acquired the company in 2008 and more than doubled the number of offices, from 72 to 152, before exiting to OMERS.

“The dental space has been growing at 6 percent per annum since 1990,” OMERS senior managing director Michael Graham told Private Equity International. “It’s pretty much recession resistant. We expect it to grow at the same rate going forward: 4 percent to 6 percent.”

Ares Capital and General Electric Capital provided debt financing for the transaction. Weil, Gotshal & Manges acted as legal counsel to OMERS.

OMERS has been pursing investments in the dental services space, a $100 billion annual market, for roughly three years, Graham said.

US-based lower mid-market firm Sentinel Capital Partners has acquired a number of dental care providers in recent years, including Michigan-based Mobile Dentists and Minnesota-based MetroDentalcare, which generated a 5x return multiple for the firm.

Other private equity firms that have acquired dental companies include European firm IK Investment Partners and Switzerland-based Partners Group.

OMERS, like other Canadian pensions, has continued to make private equity investments directly rather than committing to external funds. “We are focused almost solely on direct investing only,” Graham said. “That’s been the case for at least the last 24 months.”  

Earlier this month, OMERS launched OMERS Ventures, a new division that will provide financing directly to companies in both early and later stages of the investment cycle.