Catterton offloads PetVet hospital network to Canadian pension plan for $440M

The string of richly valued pet-care deals continues with the news that private equity firm Catterton has sold off Connecticut-based PetVet Care Centers for $440 million--a price that amounts to about 11 times its earnings before interest, taxes, depreciation and amortization (EBITDA). The buyer: the Ontario Teachers' Pension Plan.

The transaction, disclosed in a Catterton investor brief obtained by the Wall Street Journal, provides a windfall for the private equity firm, which invested $40 million in PetVet in 2012. The brief estimates that Catterton's investors will pull in about 4.7 times their original investment in cash, excluding equity rollover, according to the WSJ.

PetVet operates much like a doctors' or dentists' network in that it purchases veterinary clinics and then provides back-office functions such as accounting, human resources, legal support, and marketing. The company operates more than 25 hospitals in 10 states, according to its website.

The Catterton transaction demonstrates just how much value investors are placing on pet care these days. Last year, buyout firms paid average prices of 9.7 times EBITDA, according to Standard & Poor's figures obtained by the WSJ. BC Partners' $8.2 billion buyout of PetSmart in December was right on par with average valuations. But last summer, Summit Partners sold National Veterinary Associates to Ares Management for $920 million--a deal that valued that chain of clinics at more than 13 times its EBITDA, the WSJ says.

What's driving all this investor interest in pets? Strong consumer spending trends certainly help. Last year, Americans spent about $58.5 billion on their pets, a quarter of which went toward veterinary care, according to the American Pet Products Association. Spending on medical services for pets rose 6% year over year to $15.25 billion, the association reports.

- here's the WSJ story (sub. req.)