Cornerstone Investment Management, the corporate and real estate private equity investment manager and funds managed by Oaktree Capital Management, L.P. (“Oaktree”) have created the Nationwide Veterinary Platform LuxVet24 to consolidate entities operating in the veterinary industry in Poland. As the first step, a preliminary agreement to buy a specialized veterinary clinic Klinika Bemowo has been signed.
The Polish veterinary services market is one of the most fragmented in Europe. Based on the records kept by the Polish National Veterinary Chamber out of over 7,600 facilities, as many as 72 percent are run as veterinary surgeries, where 1.5 doctors provide veterinary care on average. Such fragmentation prevents significant investments in improving quality and medical technologies, for which economically rational use is available only for a few closely cooperating institutions.
“More and more often, we treat pets as family members and, regardless of the expenses, we try to provide them with the best care. That makes the sector more and more attractive to potential investors and, in turn, leads to the inevitable consolidation in which we want to participate through the ambitious project of creating a nationwide veterinary platform,” says Piotr Zajączkowski, a Partner at Cornerstone Investment Management.
In the coming years, LuxVet24 plans to build a platform consisting of about 200 veterinary facilities, bringing together the best and most ambitious and successful veterinarians and practice owners. The plan includes opening specialized clinics-hospitals for pets in Warsaw and the largest cities in Poland.
The investment is a partnership with Oaktree, which has already invested in UNAVETS – a sister project consolidating the veterinary market on the Iberian Peninsula. In just 18 months from the Oaktree investment, UNAVETS has brought together as many as 50 veterinary facilities and is in the process of building the first specialist reference hospital.
Ultimately, both funds will invest in the project at least €100 million in total.
“We have made every effort to facilitate the procedures and methods to join the platform. Together with an experience in cooperation with veterinary clinics and the setting a similar platform, we strongly believe the project will be successful,” adds Piotr Zajączkowski.
Marcin Halicki, who was the President of the Management Board of the LUX MED Group and a member of the Board of Directors (between 2002 and 2012), is the project leader.
“The Polish veterinary sector is entering the consolidation stage, and LuxVet24 is our response to this trend. Participation in a large, specialized platform means access to capital, enables providing high-quality services and allows benefiting from the experience of other members. We will create our platform with the participation and substantive involvement of the most recognized veterinary leaders in Poland,” says Marcin Halicki, CEO at LuxVet24.
The takeover of the veterinary clinic Klinika Bemowo is a crucial element to implement the plan. Dr Paweł Kowalczyk, an authority in veterinary medicine and the founder of one of the first private veterinary clinics in Warsaw, is the first to join LuxVet24.
“I am joining this project to help create modern veterinary hospitals and reference clinics of European standard,” says Dr. Paweł Kowalczyk, the founder of Klinika Bemowo.
“It is worth emphasizing that building a large group of veterinary practices and the inevitable consolidation processes will not only give us access to capital, modern medical knowledge, and technological quality. It will also facilitate many functions for which doctors do not have time. The platform will also make it possible to work “normal” hours, which will reduce the frustration of many young doctors who work excessively. The list of advantages and benefits for doctors is very long,” he adds.