A pension fund that manages the retirement savings of Canadian teachers is acquiring a Spanish dental chain. The debt-fueled buying and selling of dental chains that private equity pioneered in the United States has now passed into the hands of pension funds and spread as far as Europe.
The New Owner of 426 Spanish Dental Clinics
According to Bloomberg, Canada's Ontario Teachers' Pension Plan (OTPP) is arranging roughly 875 billion won ($588 million) in debt financing, led by JPMorgan Chase and Nomura Holdings, to acquire Spanish dental chain Donte Group. UBS Group and BNP Paribas have also joined the lending group. With Europe's M&A market showing signs of reviving in the second half after being rattled by tariff shocks, banks are collecting hefty acquisition-financing fees for the first time in a while.
OTPP announced in July that it had agreed to buy the company from private equity firm Advent International and Donte Group's management for an enterprise value of about 1.75 trillion won (€1 billion). Donte Group operates more than 426 dental clinics across Spain, including walk-in centers that accept patients without appointments and orthodontics-focused clinics.
Not the Pension Fund's First Dental Chain
This isn't the first time OTPP has put money into a dental chain. In 2012, the pension fund, Canada's third-largest, became the first outside investor to take a controlling stake in Heartland Dental, the largest dental services company in the United States, for about 1.74 trillion won ($1.3 billion). It later exited in 2018, selling most of its stake to private equity firm KKR. Thirteen years on, the same pension fund is now running a similar playbook across the Atlantic in Spain.
The Opposite Moment From Aspen Dental
The news comes two months after Aspen Dental reportedly abandoned its sale plans, unable to repay about 4 trillion won in debt. Both companies grew the same way, with private equity piling on debt to buy up dental chains, but they now find themselves in opposite situations. Aspen Dental's parent company, hurt by weakening performance, couldn't repay debt coming due, prompting creditors to hire a restructuring law firm. Donte Group, by contrast, is growing bigger as a pension fund loads on 875 billion won in new debt. Even under the same leveraged buyout structure, the outcome can diverge depending on whether the money comes from private equity chasing a short holding period or a pension fund with a decades-long horizon.
A Deal That Can't Happen in Korea
A deal like this couldn't happen the same way in Korea. As noted in our earlier coverage of Aspen Dental, the Medical Service Act bars anyone who isn't a licensed medical professional from opening a clinic, and it also prohibits a single dentist from opening or operating more than one dental clinic (the one-doctor-one-clinic rule). In other words, Korea has no structure at all for outside capital, whether from pension funds or private equity, to directly buy equity in a dental chain and carry out a leveraged buyout. A single company controlling hundreds of clinics, as Donte Group and Heartland Dental do, isn't something that can be replicated in Korean practices anytime soon. But the fact that long-horizon capital like pension funds is now moving into dental chain acquisitions suggests this trend has outgrown being a temporary fad among a handful of private equity firms.