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Making babies: More fertility clinic deals to see the light of day

What to expect when you’re expecting? Well, likely more M&A in the fertility sector, for one thing. In developed countries, parental age is increasing. Cue the need for assisted reproduction.

Deal volumes in the field of fertility clinics in Europe, the Middle East and Africa (EMEA) have propagated in recent years. A decade ago, two M&A deals involving fertility clinics were logged, according to Mergermarket data. By 2019, a record year for deal counts, it had multiplied to eight. This year to date, there have been four deals so far, already the same amount as in all of 2022. Will the 2019 record be broken?

Last year saw KKR [NYSE:KKR] acquire Spanish fertility group IVIRMA for EUR 3bn, the largest fertility deal in EMEA on Mergermarket record.

As parental age rises, corporates are looking increasingly at ways to incorporate some form of fertility support into their employee benefits packages, said Bilal Hasan, partner at FRP Corporate Finance. “You also have more single parents and LGBTQ parents. There are very strong market dynamics globally", he added.

For example, the UK market size is expected to grow from GBP 550m (EUR 643m) to GBP 700m in the next four to five years, Hasan said.

One in the oven

The future is pregnant with more deals, with both strategics and private equity funds as active acquirers. The UK market, for example, is fragmented, which presents a buy and build opportunity for private equity (PE) houses, Hasan said.

“In the next three to four years we think there will be lots of consolidation, especially at the smaller end, i.e. assets with one to three clinics – there are not many independent larger chains left on the market”, Hasan said.

Deal embryos

Alive and kicking is the auction process for Fresenius’ [ETR:FRE] sale of Spanish fertility clinic chain Eugin, which could fetch EUR 600m, as reported.

Independently owned UK assets – perhaps a twinkle in PEs' eyes? – include London Women’s Clinic, The Evewell, and Assisted Reproduction & Gynaecology Centre (ARGC).

Czech, CVC-backed FutureLife is acquisitive, so is UK-based, Impilo-owned The Fertility Partnership
(TFP) and Nordic Capital’s UK asset Care Fertility.

Spanish hospital group Recoletas Red Hospitalaria recently bought three fertility centres from KKR, divested as competition remedies following the PE giant’s merger of IVIRMA and GeneraLife. London Women’s Clinic, part of JD Healthcare Limited, acquired UK-based iTrust Fertility earlier this year.

Meanwhile, in an adjacent area, viO HealthTech (formerly Fertility Focus), a UK-based provider of a fertility-tracking medical device, has a score of 66, according to Mergermarket's Likely to Exit (LTE) predictive algorithm.* The company, which is backed by Coutts Investment Club, mulled a sale in 2021, but it has featured in Mergermarket's Missing in Auction series since.

Do I hear the pitter-patter of investment banker feet running for the next target?