Two Russia-focused private equity groups, UFG Private Equity and CapMan, are joining forces with the EBRD to buy into KDL, Russia’s third largest chain of private laboratories for medical testing which operates in one of the fastest growing segments of the country’s health sector.
The proceeds of this investment will allow KDL to offer its services to a larger number of customers throughout Russia, including through the roll-out of additional laboratories in additional regions.
The investment will be made in several stages. After the initial investment round, the three investors will have a total shareholding of 75%, distributed as follows: UFG 40.3 percent, CapMan 24 percent and EBRD 10.7 percent. Further commercial terms of the deal are not being disclosed.
It represents the first investment in this niche sector for all three participants. The EBRD is already an investor in the other two partners in this transaction, UFG Private Equity Fund II and the CapMan Russia Fund.
KDL was established in 2003 by two private individuals and operates a chain of 6 laboratories providing medical diagnostic testing in Moscow and five other Russian cities, Kazan, Omsk, Perm, Astrakhan and Krasnodar.
Demand for diagnostic testing is steadily rising in Russia and KDL is well positioned to benefit from further growth in a market where currently none of the international niche players is present. Over the 2006-2010 period, this segment of the Russian medical market grew at an annual rate of between 20 and 30 percent.
The project gives the EBRD an opportunity to support a Russian company which is dynamic, home-grown and professionally managed in its drive to bring modern medical testing services within reach of large swathes of the population, said Alain Pilloux, EBRD Managing Director for Industry, Commerce and Agriculture.
Alexander Devyatkov, founder of KDL said: “It is our pleasure to welcome new partners into our business, and with them we will work to continue the development of our company. In Russia, demand for private lab services is expected to growth 15- 20 percent driven by the increase of direct laboratory services for private clients, the growth of private health care industry and increased outsourcing by the public sector. Thanks to our new investors, we plan to substantially increase our market share and develop a federal laboratory network with presence in all the major regions.”
Robert Sasson, Senior Managing Partner, UFG Private Equity commented; “Healthcare services are what people will always need and we see a growing trend of healthcare expenditure in Russia. We believe that the new investors group will add value to KDL and will help it continue to develop at a fast pace, doubling the number of laboratories by 2014. We strongly believe in healthcare sector growth, and will continue looking at other investment opportunities in this sector”
“Our ownership in KDL represents our first transaction in the healthcare space in Russia. We have identified private laboratory diagnostic services, a sub-sector of the private healthcare market, as one of the most attractive markets in Russia at the moment. The sector’s growth potential will remain in the double digits over the next four to five years as laboratory expenditure in Russia is trailing far behind most developed and developing countries. As one of the leading independent laboratory diagnostic services providers in Russia with a highly professional management team, KDL is well-positioned to respond to the growing demand and strengthen its position in the market with further support from new partners,” says Maxim Popov, Investment Director at CapMan Russia.
KDL Group was established in 2003 and now is the #3 participant in the Russian laboratory market. In addition to its central laboratory in Moscow, KDL operates five regional labs in Perm, Omsk, Kazan, Krasnodar, Astrakhan, and 60 blood collection points. KDL Group was certified to GOST R ISO 9001-2008 and 15189-2009 standards in October, 2011.
About UFG Private Equity
UFG Private Equity is part of UFG Asset Management group, a leading Russian-region focused alternative asset manager with over $1.25 billion of assets under management across debt and equity hedge funds, managed accounts, real estate/agriculture funds as well as tradition private equity funds. UFG Private Equity funds invest in companies primarily in Russia as well as the neighbouring CIS countries. UFG backs exceptional management teams in businesses with clear growth opportunities and where there is an opportunity to significantly increase equity value for shareholders. Since its inception in 2005, UFG Private Equity has participated in 18 investments with an aggregate transaction value of over $1 billion.
CapMan Group is one of the leading private equity firms in the Nordic countries and Russia, with assets under management of €3.0 billion. CapMan has four key investment partnerships - CapMan Buyout, CapMan Russia, CapMan Public Market, and CapMan Real Estate - each of which has its own dedicated investment team and funds. Altogether, CapMan employs 120 people in Helsinki, Stockholm, Oslo, Moscow and Luxembourg. CapMan was established in 1989 and has been listed on the Helsinki Stock Exchange since 2001.www.capman.com