ARCHIMED delivers three times its investment and a 36 percent internal rate of return with the sale of Italian dental services chain, Primo Group
ARCHIMED’s investment helped Primo Group expand its dental clinics throughout Italy, and financed the rollout of a new approach to dentistry.
Pan-European private equity healthcare specialist, ARCHIMED announces the sale of fast-growing Italian dental chain pioneer, Primo Group, to Aksia, a Milan-based PE firm for an undisclosed sum. The investment – which generated a 36 percent annualized return, equal to three times the initial investment – was made through ARCHIMED’s inaugural MED I fund, which closed on € 150 million in 2015.
Primo was founded in 2010, only two years after Italy’s government deregulated the country’s dental market and authorized the creation of dental clinic chains.
ARCHIMED partnered with Primo founder and CEO, Mirko Puccio to lead the buyout of the firm in July, 2015. ARCHIMED proposed the deal after an analysis of Italy’s highly fragmented dental market. Primo Group was the only company in the Italian dental sector that met ARCHIMED’s selection criteria in terms of potential for organic growth and recession-proof positioning.
Under ARCHIMED’s ownership, Primo grew its revenues 36% annually and significantly increased its profits. A key component behind this growth was an acceleration of Primo’s rollout strategy. Primo today has 50 directly owned dental clinics, up from just 15 in 2015. Primo’s staff expanded to some 200 professionals from only 80 in the same period.
“In addition to offering the financing we needed to expand in Italy’s fragmented dental sector, ARCHIMED helped us recruit a top-tier board and gave us strategic insight and management support at absolutely critical moments,” says Primo founder and CEO Mirko Puccio. “By teaming up with such experienced health care professionals, we were able to grow and improve the quality of our services without losing focus or time.”
Since its founding, Primo’s growth has been driven by high quality patient care, a full range of generalist and specialist dental services, and exceptionally competitive long-term pricing policies. These strengths, and the strong brand recognition they’ve built, rely on cutting-edge technology and the economies-of-scale that come with operating a chain. Primo launched a paperless, fully integrated, automated back office system for all its clinics in 2018; Primo Lab, a wholly owned subsidiary, centralises the manufacturing of dental prostheses with the latest Computer Aided Design and Computer Aided Manufacturing technologies; and Primo Up, the firm’s proprietary software, gives dentists and patients remote access from mobile devices and web apps to individual treatment plans and appointments. Primo Up also permits quick digital searches of dental records to automate quality control.
Cost savings from scale and automation mean Primo can offer attractive opportunities to exceptional dentists in highly convenient, central high-street locations. This results in above-average long-term patient retention and an exceptionally high return on new-clinic investment.
Out of the nine investments made with MED I, which is a 2014 vintage fund, ARCHIMED has only exited the two smallest at this stage. Together with a few refinancings, those two exits returned more than 70% of their money to the fund investors. This places MED I’s performance in the Top 5% of PE funds on a global level.
“Primo is a typical ARCHIMED story where we supported the company’s growth and built up its competitive edge through a combination of innovative strategic and financial support,” says ARCHIMED partner Vincent Guillaumot. We take pride in partnering with outstanding entrepreneurs and industry professionals like Mirko Puccio and Vincenzo Notaro. We will keep working with Mirko, who is becoming a Strategic Partner of ARCHIMED in order to provide guidance on the Dental sector outside of Italy.”