DEAL TALKS: Martin Kõdar and Oliver Kullman of BaltCap talk about funds´ exit from Qvalitas and Unimed
Our member BaltCap recently announced selling the Estonian private healthcare companies Qvalitas Arstikeskus and Unimed Grupp to Mehiläinen, the leading private provider of health care and social services in Finland. BaltCap exits through selling its holding company DenCap, Mehiläinen acquires 100% of the companies.
EstVCA DEAL TALKS had a chat BaltCap partners Martin Kõdar and Oliver Kullman to hear a bit more about the exit.
1. What makes DenCap/Qvalitas and Unimed unique?
Both occupational healthcare provider Qvalitas Arstikeskus and dental care chain Unimed Grupp are market leaders in their fields in terms of revenue, service quality, and customer satisfaction. But most of all, both companies are true innovation leaders.
Qvalitas has been a frontrunner in innovative solutions, be it the introduction of state-of-the-art digital solutions for clients and patients, and mobile units to carry out on-site health checks in remote locations. Qvalitas successfully entered public-private partnerships to carry out key national services in cooperation with the public sector. Recent examples include the provision of Covid-19 testing and vaccination, and helping people on disability leave to return to the employment market.
Unimed has been constantly adopting modern technologies, introducing new services to its range of dentistry and orthodontics, and has built a unique service offering that goes beyond repairing the teeth. The integrated dental lab has also an important role in the group. The improvements have been well received by clients, as reflected in the continuous increase in net promoter score, starting from an already high base.
Last but not least, the managements and medical professionals of Qvalitas and Unimed have had a central part in the unique service offering and the business. The contribution and grit of Tõnu Velt and Marja-Liisa Alop and their teams during the 6-year holding period has been exceptional.
2. How do you assess the impact of the investment?
BaltCap is committed to building sustainable businesses. This means that in addition to financial returns we seek a positive impact on environmental, social, and governance matters with each investment we make.
Qvalitas and Unimed as healthcare service providers without a doubt have a strong positive impact on the social sphere through their service provision. Under our ownership, both companies have become vital countrywide service providers and partners for the public sector. Hence Qvalitas and Unimed have an important role in shaping the long-term development of the Estonian health care sector.
The magnitude of their social impact became evident during the first wave of the Covid-19 crisis in spring 2020. Qvalitas played a crucial role in building up the Estonian Covid-19 testing network and providing the testing service in its mobile units. Today Qvalitas has a vital role in carrying out Covid-19 vaccinations. Unimed was among the few emergency clinics during the state of emergency and developed the Estonian protocol for safe dental care during the Covid-19 pandemic.
What also speaks from the impact of the investment is the exit route. We sold the holding company DenCap to Mehiläinen, the leading private provider of health care and social services in the Nordics. Mehiläinen has long-term expertise in combining traditional medical operations and digital services. We believe the entrance of Mehiläinen marks an important milestone for the Estonian healthcare market and will widen the service offering to patients and to the entire Estonian healthcare.
3. How did BaltCap help to develop the business before exit?
BaltCap’s investment strategy in buyout funds is very much based on achieving top-line growth, both through organic value creation activities as well as bolt-on M&A.
In both of the companies, organic initiatives had a central role. We invested in expanding the IT capabilities, nationwide clinic networks, upgrading the medical equipment - all-important for strongly improving the service offering to patients and B2B clients.
For Unimed also bolt-on M&A played a key role, the acquisitions of Medicum Tartu operations (jointly with Qvalitas), Eurodent in central Tallinn, and – by far the largest add-on – Kaarli Hambapolikliinik chain of clinics in Tallinn significantly increased the footprint and service offering of Unimed.
In Qvalitas we invested in state-of-the-art mobile units that enable to carry out on-site health checks in remote locations. This allowed Qvalitas to react quickly right after the outburst of the Covid-19 pandemic and set up mobile Covid-19 testing units.
4. The biggest challenge on the road
Healthcare services are very much based on people – doctors, nurses, clinic managers, and support staff are all crucial for providing high-quality and well-functioning medical services. The biggest challenge in the investment was certainly the lack of medical personnel on the market, leading to slower growth and in some cases long queues for patients. And also “getting the culture right” within the teams, and especially in connection with acquisitions, is both a challenge and an opportunity.
- Read more about the exit HERE
- Key contacts from BaltCap:
Managing Partner I BaltCap
martin.kodar@baltcap.com
Oliver Kullman
Partner I BaltCap
oliver.kullman@baltcap.com