Updates
jan12

Update 12 January 2021

I hope that you have all had a good transition to 2021. We all hope that 2021 will; be a better year than 2020, but the shocking happenings in Washington last week and the explosive growth bin COVID-19 infections in many countries has not been a good start. Let us hope that the ongoing vaccination programs will quickly get up to speed and allow us to move back to a “new normal”.

In the meanwhile, there have been several new developments in the Dutch healthcare sector. In this update we cover:

  • Apax France to acquire Mentaal Beter. Will investors look at other Dutch mental care operators?
  • Process related to Mediq is in the end phase. Who will be the new owner?
  • Largest Dutch provider of disabled care with innovative financing program. Will other organizations follow?
  • New report from insurance companies highlights need for large investments. Where will the financing come from?
  • Bergman continues growth in Dutch market. What is happening to the sales process?

Apax France is the new owner of Mentaal Beter

As mentioned in the update of 10 November Mentaal Beter has been put up to sale by NPM Capital (Dutch PE company). After a long process the company has now been acquired by Apax Partners France. Mentaal Beter has a network of 120 locations across the Netherlands and provides a broad range of psychological / psychiatric outpatient care to children, young adults, and adults. In addition, the company provides services focused on children with learning issues. Revenues across the main operating companies was €64 million in 2019 and the companies had an EBITDA of €3.8 million.

Apax France is a sister company to the international Apax organization with a separate ownership structure. Apax France focuses on small to mid-cap companies in Europe and has a long history of investing in the healthcare sector (Unilabs, Capio, Vedici, etc.). With the purchase of Mentaal Beter it has acquired a successful company with a strong management team, operating in an attractive market. Key questions going forward will be related to Mentaal Beter’s high dependence on revenues related to youth care (financed by the municipalities) and the effects of rebalanced tariffs in the new financing system for mental care than will be implemented in 2022.

There are other attractive mental healthcare assets in the Dutch market (HSK, Dr. Bosman, etc.). Will investors who did not make the finish line for Mentaal Beter now look at other assets?

Process related to Mediq in end phase

As reported in the previous update, the current owner of Mediq (Advent) has put the company up for sale. Just before Christmas it was announced that two private equity companies have made binding offers. Although Advent could still choose to keep Mediq, it is likely that either Bain Capital or Clayton, Dubilier & Rice will be the new owner of Mediq.

Largest Dutch provider of disabled care gets financing from the European Investment Bank

S Heeren Loo is the largest Dutch provider of disabled care. The organization has revenues of €660 million, 12.200 clients and 16.100 employees (10.800 FTEs). In the coming four years s Heeren Loo will invest more than €550 million, of which €380 million in new real estate.

€200 million of the real estate investments will be financed by a series of loans from the European Investment Bank (EIB). The EIB already has made loans to the Dutch healthcare sector but these have always been to hospitals. In 2020 s Heeren Loo obtained a Fitch AA-rating. This, in combination with a clear strategic vision helped s Heeren Loo convince the EIB to provide its first loan to the (Dutch) disabled care sector.

Most international real estate investors in the Dutch healthcare sector are focused on elderly care. This is understandable as this sector will grow dramatically in the next 5-20 years. However, this “quality stamp” from Fitch and the EIB could mean the start of a broader look at the disabled care sector.

 

New report from insurance companies highlights need for large investments in long-term care

Earlier reports have shown the need for large real-estate investments in the Dutch long-term care sector. However, all previous reports have been developed on a national / aggregated level. To provide a more detailed picture the 31 regional offices responsible for buying long-term care (run by the healthcare insurance companies) have analyzed the expected growth in clients requiring long-term care at the regional level.

At the national level, the number of clients requiring long-term care will grow by 89% between now and 2040. Given the current and planned level of available beds the expected growth will result in a shortfall of more than 22.000 beds in 2025 and more than 122.000 beds in 2040.

The report also provides insights into regional differences both in current number of beds (18 per 1000 inhabitants on a national level but varying between 14 to 25 beds per 1000 inhabitants on a regional level) and the expected growth in clients. In the middle of the country (containing the big cities) the expected growth is “only” 72% while in the province of Flevoland it is expected to be more than 140%. The high growth in Flevoland is caused the triple effect of a) large cohorts of people getting old in the next twenty years, b) these elderly people living longer, and c) special for Flevoland – the fact that the main cities were established in the late sixties resulting in the original inhabitants all getting old at the same time.

In order the meet the expected demand for long-term care annual investments of €1 billion will be required. This should again highlight the attractiveness of the Dutch long-term care market for international real estate investors. In addition, the report should provide an impetus to look outside of the big cities for investment opportunities.

Bergman continues expansion in the Dutch market

It has recently been announced that Bergman Clinics has made another investment in the Netherlands. The latest acquisition is Mauritskliniek, a specialty clinic in the areas of dermatology, phlebology, proctology, and cosmetic surgery. It has clinics in five Dutch cities and revenues of €12.5 million.

This will further strengthen the network of Bergman Clinics in the Netherlands where it currently has 70 clinics across three brands (Bergman Clinics, Bey Clinics, and Memira). Given the (still) ongoing sales process this might be a good idea, as potential buyers appear to find the Dutch assets more attractive than the recent acquisitions in Scandinavia and Germany.