UK dentistry group signs £15m deal with JSE-listed investor

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The below article was published in Healthcare Business International on the 10 May 2017:

Dentex Healthcare Group, a UK dental partnership network that launched three years ago, is getting a £15m investment from South African-Mauritian firm Universal Partners to expand across the UK. We speak to Dentex CEO Barry Lanesman.

“We started the company in 2014 as a concept and worked with a few selected dentists to develop it into a business model. We made our first acquisition at the end of 2016 and we now have six regional partners currently looking to expand,” says Lanesman.

Dentex says it offers dentists a “unique co-ownership model” and capacity to roll out and support a network of practices. The group offers two kinds of deals to private practices, who can either sell a 49% stake to Dentex and become “regional partners” if they aim to expand, or become part of an existing regional partner’s network.

“Each regional partner will own a network of practices. The sort of dentists we target are not those who want to retire and sell their practice, but those who want to expand and share growth by continuing as shareholders,” adds Lanesman.

Earlier this month, Dentex agreed on a £15m deal with JSE-listed investment holding group Universal Partners. £4m was invested upfront for a 36% stake and Universal Partners has the right to subscribe for an additional £11m worth of loan notes – which would increase its stake to 49%.

Established in 2016, Universal Partners has a primary listing in Mauritius and a secondary one on the JSE’s AltX (the exchange for small and medium-sized companies). It says its principal activity is to invest in growth businesses across Europe with a particular focus on the UK.

Lanesman, a former dentist, says that the model put forward by Dentex is a first in the UK. He forecasts Dentex to quintuple its number of practices to 30 over the next year for revenues of £30-35m after the first year of operations. He expects Dentex to start being profitable in the next two years.

Prior to becoming CEO of Dentex, Lanesman ran his own banking business before selling it to Investec, which is also a cornerstone investor in Universal Partners.

Our Analysis: We are seeing a rise in models which aim to conscript the physician as entrepreneur. Other examples would include international IVF clinic IVI. In an outpatient setting, where there is low capex, the model makes a lot of sense.

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