Antares helps fund Morgan Stanley veterinary acquisition

Sustained annual increases in consumer spending on pets over recent decades has driven growth opportunities in the veterinary sector, some of which have been pursued with loans from private lenders.

On 24 August, Antares announced that it has supported Morgan Stanley Private Equity's acquisition of Pathway Partners Pet Holding with a $72 million secured credit facility. The firm acted as administrative agent and sole lead arranger on the transaction, according to the announcement.

Representatives for Antares declined to provide more detail on the loan and Morgan Stanley representatives did not return calls seeking further details by press time.

“The Antares team has delivered a financing structure designed for growth and flexibility,” Morgan Stanley Private Equity co-head Aaron Sack said in the statement. “We value the considerable veterinary sector knowledge and experience they bring to the transaction,” he added.

Pathway is a veterinary management company that owns and operates 30 general and specialty veterinary hospitals across 10 states. Based in Austin, Texas, the company works with partner veterinary institutions that are looking to sell all or parts of their practices as they seek to enhance productivity and quality of services in an industry undergoing a “transformation”, according to Pathway's website .  

The American Pet Products Association (APPA) estimates that pet industry expenditures in the US will total $62.75 billion this year, up from the $38.5 billion recorded in 2006 and a nearly 200 percent increase from the $21 billion reported twenty years ago. In 2015, veterinary care accounted for $15 billion of $60.28 billion in total spending, trailing only food and supplies (which includes over the counter medicine), according to the APPA.

As spending on pets has grown, the veterinary sector has attracted the attention of private equity investors, whose investments and management expertise allow veterinarians to continue growing while concentrating on patient care, according to the veterinary industry site dvm360.com .

In addition to the Antares transaction announces last week, private lenders have played a role in supporting other transactions that reflect this trend.

Last year, Golub provided a $232 million facility that was used in the acquisition of PetVet Care Centers by Teachers Private Capital, the private equity arm of the Ontario Teachers' Pension Plan. Back in 2014, the French alternatives firm Ardian provided a €255 million facility that was used to support the expansion plans of Ceva Sante Animal, a veterinary health company with plans to expand in Asia.

Antares is a mid-market lending firm owned by CPPIB with about $11 billion in capital under management, including leverage. The firm primarily focuses on senior and unitranche loans to sponsored-backed transactions and companies with EBITDA of between $7 million and $125 million. Anatares is based in Chicago and maintains offices in New York, Los Angles, Norwalk, Atlanta and Toronto.