Additional A$30m Banking Facility for Dental Partners Growth
Abano Healthcare Group has today confirmed an additional A$30 million, five year banking facility with CBA in Australia, dedicated for the increased growth plans of its Australian dental business, Dental Partners.
The Dental Partners facility is in addition to the existing seed facility of A$25 million, which has been in place for three years. This has now been fully utilised in establishing the head office and support infrastructure and acquiring the first 36 dental practices in the network.
Abano owns 70 percent of Dental Partners with the founding management and clinical team holding 30 percent. The company was established in June 2008 and for the last three years, the Dental Partners strategy has been to expand the network size through both organic and acquisition growth. This has resulted in economies of size and scale after covering the relatively fixed cost of a central overhead support and management structure.
Dental Partners’ 36 clinics are in Queensland, New South Wales, ACT, Victoria South Australia and Western Australia, and the group now contributes strongly to Abano’s revenues, cash flows and bottom line profitability. Following the success of the first three year establishment phase, the Dental Partners board identified that accelerated growth through acquisition was both possible and desirable.
The Abano board has endorsed this strategy and, with increased equity support approved to secure the increased debt lines from CBA, the acquisition growth target has been increased to add between A$13 million to A$18 million in annualised revenues each year.
Managing director of Abano, Mr Alan Clarke, commented: “This revenue target translates to between 13 and 18 “standard dental practices” to be acquired each year.
“The accelerated growth strategy and the new banking facility will provide certainty and funding for the next two years of Dental Partners growth and will translate into growing bottom line profitability for Abano in the years ahead, as the annualised income generation of the new acquisitions is realised.
“Revenue and operating earnings from acquisitions will improve the earnings before interest and tax over the next two years as practices are acquired. However, the increased line fees and costs associated with the establishment of this new banking facility will impact immediately in the new financial year.
“The Australian dental market is estimated to be worth A$4.5 billion per year and consolidation of the market is already underway with several corporate groups now active.
“Dental Partners now has an established business model and a strong clinical base and clinical culture, with a growing positive reputation amongst the dental fraternity. We are well positioned to take advantage of this enormous market and the opportunities it offers for profitable growth.”