Abano takes bite of Australian dental market
ABANO Healthcare Group today announced that it has entered the Australian dental market through a partnership with Dental Partners, an Australian-based dental company owned by experienced dental sector executives, dentists and management.
In line with its partnership philosophy, Abano will own 70% of Dental Partners with the remaining 30% held by the founding shareholders, headed by Mike Timoney and David Garofalo.
With a vision to create a new professional network of dental practices in Australia, Dental Partners will commence operations over the next fortnight with the acquisition of nine initial practices, concentrated mostly in the Queensland area.
These practices will contribute annualised revenues of over A$15 million and the investment is expected to be NPAT positive in the current financial year. It is anticipated that up to 10 additional practices will be added to the network by the end of the financial year.
The initial investment of approximately $10 million will be funded through equity from the founding shareholders and Abano as well as a stand alone, five year separately secured debt funding facility with Commonwealth Bank of Australia.
Managing director of Abano, Mr Alan Clarke, said: “We are delighted with our new partnership and excited at the opportunity ahead. The Australian dental market is estimated to be worth more than A$4 billion – over eight times bigger than the New Zealand market.
“There are many similarities between Australia and the New Zealand dental market where we own the country’s largest dental network, Lumino The Dentists. The Australian business will build on Abano’s significant experience from operating Lumino The Dentists in New Zealand in addition to the extensive local skills and knowledge of our Australian partners.
He continued: “By May 2009, the end of the current financial year, we plan to have over 40 practices in New Zealand, and over 15 practices in Australia, with a number of acquisitions for both dental businesses to be finalised over the coming months.“
Chairman of Abano, Mrs Alison Paterson, commented: “Dental Partners draws on Abano’s five years of experience developing and growing the Lumino Dental network in New Zealand. It is in line with our philosophy to form equity partnerships with people that make the business a success, where our skills are complemented by their local knowledge and country experience.
“This has been a carefully planned entry into the Australian market, with research, due diligence and negotiation taking place over recent months. We are pleased with this second business entry into Australia following the successful launch of our audiology business in Queensland in January 2007, under the Bay Audio brand.
“As Abano’s business operations continue to expand across the Tasman, we expect an increasing percentage of the Group’s revenue to be generated out of Australia.”
Mike Timoney and David Garofalo believe the Australian dental market offers significant potential for a new astute investor.
Mike said: “The majority of the Australian dental market is still made up of stand alone or small group dental practices. Consolidation of the sector has only just begun with a few private and publicly listed companies grouping practices. With over 5,000 dental practices and 9,000 registered Dentists in the Australian market, this leaves a lot of room for new entrants such as Dental Partners.”
Abano’s wholly owned New Zealand dental business, Lumino The Dentists, also continues to grow, with an additional two practices recently added to the existing network of 33 practices.
Remuera Village Dental in Auckland and Capital Endodontics in Wellington both joined the network in recent weeks. Endodontist, Radu Goga, is the first of many specialists to join Lumino The Dentists and is part of the strategy to expand Lumino’s dental offering into specialist dental treatment.
Alan Clarke said: “Over the past two financial years, Lumino The Dentists has acquired on average six practices per year. However in the last financial year ended 31 May 2008, Lumino acquired nine new practices in New Zealand, in line with our previously disclosed target of between eight and ten per annum for the 2008 and 2009 financial years.”