Canadian funds buy U.K. fertility clinic amid flurry of health care deals

Jan 18, 2021

By Andrew Willis for The Globe and Mail

Andrew Clark made his first fortune in the business of death. Now he’s investing in the miracle of birth.

The former chief executive of Park Lawn Corp., Canada’s largest cemetery operator, acquired British fertility clinic Bourn Hall Ltd. last week for £15-million ($26-million). Mr. Clark staged the takeover through newly launched Triangle Capital Corp., a Toronto-based private equity fund. Triangle teamed up on the acquisition with Bulldog Capital Partners Inc., a merchant bank founded by health care entrepreneur and Montreal Canadiens minority owner Michael Andlauer.

Triangle’s purchase of Bourn Hall – a company founded by two researchers who pioneered invitro fertilization in 1978 with the birth of test-tube baby Louise Brown – marks the latest in a string of health care acquisitions by Canadian private equity firms. From the largest players, such as the Ontario Teachers’ Pension Plan and CPP Investment Board – to small funds such as Triangle that are backed by wealthy families, private equity investors are flocking to the dependable revenue and strong growth potential in everything from dental offices to optometry and physiotherapy clinics.

“There’s a compelling opportunity in fertility services,” Mr. Clark said. “Our research showed around the world, not enough attention is being paid to women’s health issues.” As part of the transaction, Bourn Hall chief executive Mike Macnamee maintains his 20-per-cent stake in the company.

Mr. Clark plans to expand the Bourn Hall’s six-clinic chain in part using a playbook that increased the value of the Park Lawn’s funeral business by more than 300 per cent during his nine years as CEO. The strategy is to acquire rivals – Park Lawn grew through takeovers – while opening new offices and catering to “fertility tourists,” or clients willing to travel for assistance in having children through IVF procedures and surrogacy. “Clients at fertility clinics are geographically agnostic,” Mr. Clark said.

Bourn Hall has helped more than 15,000 clients have children over four decades. An IVF treatment cycle typically costs between £3,000 and £10,000, or $5,000 to $17,000.

Triangle is the second private equity fund to own Bourn Hall. The Cambridge, England-based company was founded in 1980 by British researchers Patrick Steptoe and Robert Edwards, then acquired in 2014 for £3.5-million by London-based Mobeus Equity Partners LLP. Like most private equity funds, Mobeus wanted to cash in on its investment after owning it for nearly seven years (Mr. Clark called Mobeus “a motivated seller”).

Mr. Clark negotiated the trans-Atlantic takeover over four months, without visiting Bourn Hill’s facilities in England. “Without the pandemic, we could have done this [in] 30 days,” said Mr. Clark, who was an executive at Toronto-Dominion Bank prior to joining Park Lawn. ”I spent more time than I care to recall recently in Zoom calls with bankers, lawyers and consultants in England,” he said.

Looking ahead, Mr. Clark said Bourn Hall may tap public markets for expansion capital in the next two years, through an initial public offering, if investors continue to show strong interest in growth companies. He said Triangle expects to make additional acquisitions, with target valuations into the hundreds of millions of dollars, in “multisite, consumer-facing businesses.”

Private equity funds are also investing in Canadian fertility clinics with national expansion plans. Last August, Toronto-based Peloton Capital Management led a $90-million investment in eight-clinic, Toronto-based chain called the Fertility Partners. That transaction saw Peloton partner with Australian private equity firm Heal Partners Trust.

The Fertility Partners has clinics in five provinces, under brand names such as Clinique Ovo in Quebec, Aurora Reproductive Care in Saskatchewan and Olive Fertility Centre in British Columbia. Its growth plan is to invest in existing business, which is known as a roll-up strategy in private equity circles.

Peloton, founded two years ago by veterans of the Ontario Teachers plan and financial services entrepreneur Stephen Smith, also invested $75-million in national chain 123Dentist Inc. last summer. The Coquitlam, B.C.-based firm has more than 100 offices and tapped Peloton for expansion capital.

That deal came after a 2018 private equity investment in the country’s largest dental chain, the 350-office Dental Corp. of Canada Holdings Inc., by a consortium made up of L Catterton, based in Greenwich, Conn., and Toronto-based Imperial Capital Group Ltd. and OPTrust.

Last fall, Vancouver-based CAI Capital Partners took a significant stake in RebalanceMD Canada Ltd., which offers patients everything from hip and knee replacement surgery to sports injury treatments, physiotherapy and bracing. With private equity backing, Victoria-based RebalanceMD plans to expand across Canada.