CAPZA, a European private investment platform, will help new portfolio company IMDEV become the second largest, if not the largest, radiology group in France over the next five years, at which point it will likely attract the interest of strategic or infrastructure bidders, according to Guillaume Basquin, partner at CAPZA Flex Equity Mid-Market.

The French private equity firm and state-owned investment group Bpifrance have paid somewhere between EUR 50m-EUR 100m for a minority stake in IMDEV, according to press reports. Most of the money is “cash-in” that will support the company’s growth, Basquin said. Lender ICG has reportedly rolled-on by extending a new unitranche loan to its existing portfolio company.

This news service reported last year that IMDEV was working with Amala Partners on the capital opening and that CAPZA was favourite to price out rival bidders such as Bridgepoint.

CAPZA invests right across the capital structure allowing it to structure minority or majority deals via straight and preferred equity, convertible bonds, and mezzanine instruments. The Flex Equity Mid-Market II fund, which has struck the deal, has a similar four-to-six-year investment horizon as an LBO fund, Basquin said.

Founded in 2019, IMDEV operates a network of 120 centres with 200 radiologists across France, offering a range of imaging services. It implements innovative technologies such as artificial intelligence and teleradiology. The company plans to expand organically and through strategic acquisitions.

IMDEV reportedly made more than EUR 100m in revenue in 2023. Basquin declined to reveal the company’s EBITDA, but he said it has similar margins to rival Simago.

Basquin told Debtwire that IMDEV was the last sizable independent platform in France that remained a project of radiology for radiologists. IMDEV has a well-structured management team with 10-15 people providing central services like finance, admin and ESG. “It brings a tailor-made toolbox to all the acquisitions,” he said.

IMDEV will strike bolt-on deals, large and small, mostly outside of its Île-de-France heartland with practice owners that want to join and invest in the project, according to Basquin, who added that it is too early to consider internationalisation at this stage.

The radiology industry is rapidly consolidating as financial investors come in and private owners, often older retirees, sell out. The constant churn of radiologists retiring is helping to drive liquidity events. IMDEV was the latest in a long line of radiology deals to turn up on the French M&A pipeline following Simago, Résonance Imagerie, Oradianse and Excellence Imagerie, as previously reported.

Basquin said that he expects some deals between the larger players in the next stage of consolidation.

“The vision we have is there will remain three-four big players, like you have in the medical laboratory space,” Basquin said. “The difference with labs is that in radiology the synergies are more “soft” synergies; IMDEV is basically sharing the best practices and knowhow for radiologists to run their own clinics and benefit from scale effect on machines purchases for example.”

As reported, the large lab groups such as Biogroup, Cerba and Synlab have been under strain now that the pandemic boom for lab tests is over.

The larger radiology groups, however, will benefit from new authorisations to build medical imaging centres in many of France’s medical deserts. That should help the industry consolidate much faster than lab diagnostics, which took around 15 years to reach maturity, compared to the seven-to-eight years that could be expected in radiology, Basquin said.

The wave of investment into the sector has not been without controversy, as previously reported. However, far from slowing down, it already appears to be rolling into the adjacent area of radiotherapy where several platforms have come onto the market.