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Friday, Mar 29, 2024

Animal Hospital Chain Snagged by L.A. Firm

This month’s decision by Ares Management LP to acquire NVA Holdings Inc. marks the investment fund’s second major purchase in the Conejo Valley this year. NVA in Agoura Hills operates the subsidiary National Veterinary Associates, the largest private owner of freestanding veterinary hospitals in the country with more than 240 facilities in 39 states. Terms were not disclosed, but estimates of the transaction’s value are around $800 million with debt, according to analysts, including Stephen Ellis at Morningstar Inc. in Chicago. The sale is expected to close in the third quarter. Ellis said the veterinary and animal health market is a solid investment. He noted VCA Inc., a publicly traded hospital chain in Los Angeles, regularly reports strong returns. VCA owns more than 600 animal hospitals in the U.S. and Canada and reported revenue of $1.8 billion last year, up 6 percent from the year prior. “We view that business as a good one,” Ellis said. Los Angeles-based Ares has about $77 billion in assets, and Ellis said the firm is usually smart about the companies it chooses to acquire. In April, Ares purchased Guitar Center Inc. in Westlake Village, and it also owns businesses in various sectors including oil, gas and industrial. NVA will be its first animal health-related acquisition. “It’s a new space for them to invest in, but I don’t know if it’s indicative of a broad trend or just an investment that would work out for them,” Ellis said. According to the American Pet Products Association, pet ownership is at an all-time high with 68.5 percent or 82.5 million Americans owning pets. Kevin Ellich, a senior research analyst who specializes in the animal health sector at investment firm Piper Jaffray Cos. in Minneapolis, has seen significant consolidation in the industry, with VCA acquiring about three to 10 new animal hospitals each quarter. But the industry overall keeps growing in tandem with the market. “As long as people keep adopting pets and buying these exotic animals, they need vaccinations, they need to be seen by a vet on an annual basis,” Ellich said. “There is room for growth in this industry, even in the bigger chains.” NVA was previously owned by investment funds affiliated with Summit Partners in Boston. After the acquisition, NVA’s senior management team will retain a minority stake. It is unclear if there will be management changes or employee shifts, but Greg Hartmann will remain chief executive. “Summit has played a vital role in growing NVA for the past seven years, and we thank them for a very successful partnership,” Hartmann said in a statement. “We are delighted to partner with the Ares Private Equity team as they share our vision for continued growth.” Ares and NVA did not respond to interview requests for this story.

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